Cashless payment, courier services–finding opportunities in crisis

Not everybody loses during crises. It’s been an established business phenomenon that someone is sure to gain for somebody else’s loss. I wish it doesn’t have to be this way, but it is how the wheels of commerce turn. Ever heard of the stock-market phrase, “buy when there’s blood in the streets”?

There’s no argument that the pandemic has brought the global economy to its knees. Millions have been out of work for months in the wake of most businesses closing shops around the world, even as governments scramble to raise the wherewithal to fund their various stimulus packages.

But the pandemic has also brought out the resiliencies of many who find ways to thrive in these most trying times. In the village where I live, for example, Viber chat groups have mushroomed to serve as a platform to sell anything and everything under the sun. Cooped up in the comfort of our homes, my neighbors and I are enjoying the convenience of online buying and selling of food and such essentials for delivery right at our doorstep, minimizing the risk of going out and getting infected with Covid-19 and its variants. Multiply this experience to maybe thousands more subdivisions, and you’d get the drift of why and how small- and medium-sized businesses are coping with the pandemic and the almost year-long lockdown we’ve been through.

Established restaurants, supermarkets, department stores, and other suppliers have likewise embraced cashless payments as the new business norm. The obvious beneficiaries, of course, are online banking providers and courier services. The growth of PayMaya and GCash has also spurred the expansion of courier services, such as Grab, Lalamove, 2-Go, JRS, market leader LBC, and many more.

PayMaya, GCash and LBC appear to have taken a considerable bite at this growth pie. PayMaya, for one, ends the year with more than 28 million customers across its platforms expediently paying for purchases, adding money, cashing out, or remitting to other parties in over 200,000 touchpoints nationwide.

PayMaya President Shailesh Baidwan was even quoted as saying, “This radical shift to cashless for the Philippines will only continue accelerating in 2021 as we offer more services and forge more enterprise partnerships that are relevant for many consumers.”

Globe Telecom’s GCash, on the other hand, saw the number of registered users soaring 150 percent this month from mid-March last year. “In a world where digital is the new normal, financial technology should be considered the bedrock of digital services,” Pebbles Sy, chief technology and operations officer at Globe Fintech Innovations (or Mynt), which operates the GCash service, said in mid-May 2020.

The Bangko Sentral Pilipinas (BSP) has set a target of raising the share of electronic payments to 50 percent in terms of volume by 2023. But the figure had only inched 10 percent in volume by 2018, according to a report published in December last year by the Better Than Cash Alliance, a UN-based partnership of governments, companies and international organizations that aimed to accelerate the transition from cash to digital payments.

Coupled with the growth of online selling and e-commerce, the growing habits of consumers to buy online has effectively increased demand for such delivery services, particularly through the changing lockdown levels and procedures.

Needless to say, a rightward shift in the demand curve is usually met with a corresponding increase in supply. Indeed, while we have seen a number of local courier companies cropping up recently, LBC’s market ranking stands solid at the top. In a phone conversation with a friend (who holds a top position at the company and begged not to be identified), I learned that the company’s main holding company, LBC Express Holdings, more than made up for lost ground in the third quarter of 2020, as the demand for logistics and courier services surged alongside the gradual reopening of the economy. This meant a bottom-line boost of 38 percent year-on-year, placing LBC in a prime growth position for 2021.

Originally known as the Luzon Brokerage Company, LBC was founded by the Araneta family initially as a brokerage firm. The company later expanded into air cargo and more logistics-based services as time went on. In 1985, the first branch of LBC outside the country was established in San Francisco. LBC introduced a game-changing concept that has become a ubiquitous part of Filipino culture: the Balikbayan Box.

To date, LBC has over 6,400 locations across the Philippines, the US, Canada, as well as Hong Kong, Brunei Darussalam, Malaysia, Australia, Singapore, Germany, the UAE, South Korea, Japan, Spain, Kuwait, South Korea, and Taiwan. They are the country’s market leader in payments and remittance, documents and mail, parcels and boxes, and cargo and logistics. As a testament to their corporate foundations and resiliency, they actually made significant gains in their earnings despite the pandemic.

Driving LBC’s success in the midst of the pandemic, according to my friend, are the extraordinary strides the company is taking in maintaining safety protocols and Covid-proofing its processes to ensure business flexibility and stability. He says that the Employers Confederation of the Philippines has lauded LBC for enacting best practices during the pandemic. “At the height of the lockdown, we activated our ‘Business Continuity Plan,’ which encompassed action modules for employees and overall operations. We set in place guidelines for skeletal forces and put majority of office workers on Work-from-Home arrangements. We also heightened precautionary and preventative measures to deliver quality services while at the same time ensuring the safety of our frontliners.”

Now that both traders and consumers have discovered the convenience of cashless trading and courier services, is it safe to say then that this kind of transaction will be the business default mode even after the pandemic has been contained?

For comments and suggestions, e-mail me at mvala.v@gmail.com