CHRISTMAS is barely a week away and the rush is everywhere, those scurrying to the malls and bargain hubs everywhere to grab that all-important gift for a loved one.
But that’s not the only rush that’s incoming on the Holiday Season radar. Remittance coming from overseas Filipino workers (OFWs) is also expected to rise to a surge since many OFWs will send their Christmas padala, whether in cash or in kind, to their families here for their shopping spree and other important needs.
The National Economic and Development Authority (Neda) said that remittances will hit a yearly high this month because of that rush, and hopefully will prop up the peso against the mighty dollar. This month, the Bangko Sentral ng Pilipinas (BSP) said OFWs’ remittances rose by 3.8 percent year-on-year in September 2022 to $2.84 billion, with the BSP citing robust growth both from land-based and sea-based workers.
And the rush will keep on going. Earl Melivo, Country Director of WorldRemit Philippines, told the BusinessMirror that as the end of the year approaches, it is expected that remittance inflows will further increase, thus, a plus for consumer spending, which accounts for around 70 percent of the economy.
“We believe that remittances are likely to grow further this year despite the pandemic and financial crisis due to continued increase in key market sources and a rebound in some nations. This represents a significant contribution towards the economic recovery of the country before the end of the year,” Melivo pointed out in reply to an email query from the BusinessMirror.
Padala system: Still present but fading
MELIVO said the Filipino practice of the padala system is still happening to this day and age but not as prevalent as before. The Philippine Statistics Authority (PSA) showed in a study it did in 2020 that remittances through bank transfers remained the most preferred option, accounting for about 51 percent of cash remittances.
Meanwhile, Melivo said around 45.9 percent of the total cash remittances were made through money transfer services like WorldRemit. The remaining share of around 3.1 percent of the cash remittances sent by Filipinos working in other countries were through the agency/local office of the OFW, friends, co-workers, door-to-door, etc.
“The simplicity and accessibility of remittances through digital remittance services and banks enables OFWs to connect with their loved ones and boost their spending capacity for essential expenses. In addition, these services are more secure compared to the practice of the traditional padala system,” Melivo told the BusinessMirror.
BACK in the day when offline legacy players lorded it over in money transfer, Melivo said they were able to disrupt the norm by making international money transfers online safer, faster and at a lower cost. He said that with a wide partner network to support their customers’ sending and receiving how and when they want it, as well as buffed security mechanisms, they were able to adjust to the rapid changes in financial technology by prioritizing convenience and cost effectiveness.
Since they first opened transfers to the Philippines in 2011, Melivo said WorldRemit users around the world have already sent billions of dollars to OFW families in the country. As of the first half of the year, WorldRemit users globally have sent over $600 million to the Philippines this year.
“Today, we cover 50 sending countries and 130 receiving countries. We operate in more than 5,000 money-transfer corridors and employ around 1,500 people worldwide, and are proud to employ more than 430 employees in the Philippines as a vital part of our ecosystem.”
Pandemic accelerates digital transformation
THERE is no doubt, Melivo said, that the pandemic accelerated the digital transformation of the financial services sector here in the Philippines. For instance, as online spending soared during the pandemic, digital wallets saw a surge in newly registered users, causing Filipinos to shift away from cash transactions and toward digital payment platforms for their financial needs.
He said they saw a significant effect on the amounts of money sent, or planned to be sent, particularly for the key reasons people send money abroad. For instance, this year, Melivo said he sees the costs of Christmas spending increase across the majority of countries year-over-year, highlighted by the hikes in the prices of food, illustrating the impact of inflation on everyday essential items and the importance of remittances.
Other factors that contributed to the advancement of digital transactions include convenience, along with innovative services provided by global players like them, Melivo said.
In terms of countries receiving the highest amount of personal remittances on an annual basis, Melivo ranks the Philippines as one of the top five.
Given the rapid advancements in financial technology, Melivo said service providers are constantly on their toes to adapt to the changing needs of remittance senders and receivers.
“There are definitely a lot of opportunities to continue tailoring services and partner network base to support our diverse customer base, as well as to explore even tighter security with the rise of cybersecurity threats and scams.”
Looking at the 2023 crystal ball
MELIVO said cash inflows from OFWs have been major drivers of the domestic economy for decades. In February 2021, he said remittances increased by 5.1 percent, growing to a total of $31.418 billion. These figures note a significant rise as the economy began to open and recover post-lockdown.
The World Bank, he pointed out, is set to release figures and predictions for 2023 and they look forward to seeing the expectations for the year ahead globally.
“For us, in light of the demand for OFWs in host countries that are reopening their economies to foreign workers, actual OFW deployment, and the shift to digital finance, we estimate that remittances will continue to grow and support the country for years to come. And for us, we will continue to be committed to providing fast and secure international money transfer and remittance services to protect OFWs’ hard-earned money.”
Image credits: Hanohiki | Dreamstime.com