THE chief of money-transfer organization (MTO) UniTeller Filipino Inc. believes
if the Philippines becomes a cashless society, the country would be able to meet the sustainable development goals (SDGs) target to cut remittance cost to 3 percent.
UniTeller President and Country Director Noel Fernando C. Cristal told the BusinessMirror a cashless society means lower overhead costs for businesses that offer remittance services which will ultimately bring down remittance costs.
Under SDG 10 on reducing inequality within and among countries, countries should reduce to less than 3 percent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 percent by 2030.
“Maraming aspeto. Pagka-cashless ’yan, hindi mo na kailangan ng brick and mortar, [There are many factors. If the transactions become cashless, you don’t need a brick and mortar (facility)” Cristal said on the sidelines of a briefing on Monday. “Brick and mortar is really a big part; ang laking gastos nun so lahat yun, kailangan bumawi. Internet na lang ang kailangan mo. [Brick and mortar is really a big part of the cost; that’s a big expense so you have to recoup that. In cashless transactions, the Internet is all you need].”
Cristal said a cashless Philippines can become a reality in five years if more private-sector firms allow cashless transactions.
He said the unwillingness of some firms to utilize mobile wallets and other technologies when peddling goods and services is one of the reasons cashless transactions made by Filipinos are few and far between.
Based on a survey that Unitell conducted, Filipinos still prefer a semi-digital solution even if 92 percent of Filipinos are open to use electronic money transfers.
This means online transactions are confirmed first before fulfilling the transaction at a physical payer location.
“A cashless society or a cashless market will really depend on where I could use it. More usage, therefore, more cashless transactions which is where the government [wants to go],” Cristal said.
National ID
Cristal added that the full implementation of the Philippine Identification System (PhilSys) will also help transform the Philippines into a cashless society.
The PhilSys provides for a national identification system that seeks to unify all government IDs into one. It will provide identification to both citizens and resident aliens of the country to facilitate public and private transactions.
Through the PhilSys, more Filipinos will be able to obtain access to financial services. Based on their study, remittance receiving families across Asia consider “cash” as “king.”
This is partly because of the inability to meet basic requirements in opening bank
accounts and lack of access to banking services.
“We can see immense opportunity for the digitalization of remittance services to make peoples lives easier. Many overseas workers have families that reside in provinces, outside of urban centers where physical services are more accessible,” Cristal said.
“Similarly, for senders, there is a high time cost with remittance services often requiring them to physically go to a location and queue on their day off,” he added.
Insufficient
ACCORDING to the report, half of remittances received by Filipino households are used for day-to-day family needs at 25 percent, and bill and loan repayments, another 25 percent.
Data also showed much smaller sums are being apportioned to areas that may further economic progress, including education at 13 percent; savings, 13 percent; and, relatively high amounts are spent on nonessential luxury items, 7 percent.
“This poor financial planning is exacerbated by almost 1 in 5 or 19 percent of remittance recipients in the Philippines saying they regularly run out of money,” UniTeller said.
Nearly three quarters or 72 percent of Filipino recipients said they will reach out to the sender when they run out of the money they receive, with 53 percent saying they will ultimately have to forgo day-to-day needs if this happens. The survey further finds that a reliance on remittances may also place increasing stress on the relationship between senders and receivers.
Two in 5 or 41 percent report that the expectation of receiving remittance places emotional stress on their family and over half or 54 percent said it impacts their relationship with the sender.
“With global mobility increasing, remittances are playing a more important role in the livelihoods of low-income families and communities. As the reliance on remittances grows, a key challenge is ensuring this income translates to building sustainable wealth,” Alberto Guerra, CEO of UniTeller, said.
Data showed the average monthly remittance value sent back by low-income overseas Filipino migrants is $446, compared to their receiver’s average monthly household income of $175. The Philippines is the fourth-largest remittance destination in the world with $34 billion of inflows in 2018.
The report, titled “Both Sides of the Coin: The Receiver’s Story,” is the first installment of UniTeller’s research into the behaviors and attitudes of low-income remittance recipients.
The report is based on a survey of 1,911 interviews with adults from low-income households, which were conducted online and face-to-face in September 2019 in India (503); Indonesia (501); the Philippines (606); and Vietnam (301).