Migrant workers and their families were among the hardest hit by the COVID-19 pandemic as thousands of overseas Filipino workers lost their jobs and returned home due to the slowdown in global economic activity, a report from the Senate economic planning office in 2021 revealed.
From 2.2 million in 2019, total OFW deployment dropped to 549,800 in 2020, or a 74.5 percent decline. Immediately after the declaration by the World Health Organization of a pandemic, the Philippine government suspended travels and issued a ban, specifically on the deployment of healthcare workers to beef up the number of medical professionals in the country.
This of course is a cause of worry even for our government. OFW remittances are a major driver of household consumption spending, accounting for an average of 9.3 percent of the country’s gross domestic product.
But for migrant workers who remained overseas, the pandemic was and should not be a reason to stop sending money to their families in the Philippines. After all, one of the main reasons, if not the only reason, why they work and stay abroad is to support their families here.
The Senate report noted that remittances are known to be countercyclical, meaning OFWs tend to send more money to their families at home during economic downturns or in times of crisis. And so while both cash and personal remittances dropped by 0.8 percent in 2020, the decline was much smaller than what was initially forecasted by the World Bank, which is five percent, and by the Bangko Sentral ng Pilipinas of two percent.
Cash remittances fell from $30.1 billion in 2019 to $29.9 billion in 2020 while personal remittances decreased from $33.5 billion to $33.2 billion.
According to the report, the better-than-expected outcome in remittances was also partly attributed to the shift from informal to formal remittance channels due to mobility restrictions and border closures.
WorldRemit Philippines country director Earl Melivo, in an interview, revealed that the pandemic brought about a huge change in the way migrant workers and other overseas-based individuals send money to the Philippines, shifting largely from traditional means such as bringing money to traditional brick-and-mortar outlets such as banks and other physical outlets to digital money transfers.
WorldRemit is a digital, global cross-border payments company and ranks among the top players in the world.
At the start of the pandemic, around 65 percent of remittances to the Philippines were sent in cash while 30 percent was coursed through banks and only five percent through mobile wallets. But now, around 60 percent of inward remittances are being sent through banks and mobile wallets, with the latter done to a large extent through digital transfers.
Among the various ways of sending money to the Philippines, digital remittances or money transfers in fact are exhibiting the highest growth rates and this trend is expected to continue albeit the absence of mobility restrictions.
London-based WorldRemit was among the first, if not the first one, to introduce digital money remittances to the Philippines. Unlike other money transfer operators which both have physical and digital presence, WorldRemit facilitates money transfers only digitally.
Those who want to send money through WorldRemit can go to its website or download an app. They can either deposit money to WorldRemit’s bank account or pay using their debit or credit cards.
Meanwhile, to make sure that the money is delivered quicky and easily across the Philippines, WorldRemit has a network of trusted partners here, which include banks, pawnshops, and e-wallet operators. The funds can be transferred to a bank account here, can be picked up in a cash pickup locations, or to a mobile wallet such as GCash, Maya, GrabPay and ShopeePay.
At the onset of the pandemic, WorldRemit was the first globally to allow the transfer of funds from abroad to multiple mobile Philippine wallets.
WorldRemit has been in the Philippines since 2011 but in the last two years alone, it served more than 20 million customers.
Sending money from a bank abroad to the Philippines takes a longer time and can be expensive, at an average cost of $15 per transfer. Meanwhile, sending the money through WorldRemit is 46 percent cheaper compared to banks, aside from the fact that it offers better exchange rates and allows the money to be received in less than five minutes.
WorldRemit only currently allows inward remittances or money transfers from over 50 countries to the Philippines. These include North America, Australia, the United Kingdom and New Zealand. At the moment, it does not allow transfers from the Middle East to the Philippines but this is something that WorldRemit is working on.
The outward remittances sector is still small at around $500 million a year compared to inward remittances of about $35 billion. But according to Melivo, this is one area of business that they are looking into.
Meanwhile, just last year, WorldRemit was able to complete the acquisition of SendWave. The combined companies processed $10 billion in money transfers in 2020. WorldRemit has the license to send and receive money in more than 50 countries, and the license to only receive money in 80 which includes the Philippines. But this can change soon as WorldRemit is also looking at getting the license to engage in outward remittances from the Philippines.
Melivo revealed that sending money digitally through WorldRemit is not only cheaper and faster. It is also safe and even allows customers to track their money using the World-Remit app. To allay concerns about possible use of digital transfers for money laundering purposes, WorldRemit makes sure that it adopts means to really know their customers. As for suspicious transactions, Melivo said their partner financial institutions determine which persons are required under the Anti-Money Laundering Act to report these.
Melivo, who is also the interim WorldRemit Asia-Pacific managing director, also revealed that the company is also looking at the adoption of blockchain technology for its platform for better security and faster validations and according to him, they are already in talks with a number of potential partners.
When was the last time I updated my passbook? After all, by just accessing my bank’s mobile app, I can already check my balance and verify my transactions. When was the last time I went to a physical outlet to pay for my utility bills? Now, I pay everything online which saves me a lot of time and effort.
The BSP has confirmed that the pandemic has indeed induced a shift to digital transactions. It compared the volume and value of electronic fund transfer 76 days before and during the ECQ and found that the volume increased by 87 percent and value by 42 percent while those for ATM withdrawals and check transactions all went down significantly.
In its roadmap, the BSP expects that half of the volume of total retail transactions to be digital by this year. At the end of 2021, 30.3 percent of total retail payments were already digital.
Soon, everything will be cashless. In fact, I just recalled that one of the complaints against our airports is that foreign travellers needed to look for ATMs because a number of outlets and services were only accepting cash. In China, I needed a payments app just to be able to buy fruits from a street vendor.
A cashless society is something that we can definitely look forward to.
For comments, e-mail at mareyes@philstarmedia.com