OFW remittances via online, mobile banking growing

MANILA, Philippines – Majority of the overseas Filipino workers (OFW) send funds home via traditional money transfer services, like banks, but a growing trend is brewing: cash transfers via online transactions using mobile devices, kiosks and automated teller machines. 

There has been a growing demand for bank account-to-account or purely online transactions, noted Grant Lines, senior vice president for South Asia and Middle East and MoneyGram International. 

“Filipinos are very technologically savvy. Traditional cash-to-cash is still growing. Transfer via mobile phone is upcoming,” he said at a press briefing on March 14.

“The education level for different markets are different. Japan uses the online services. Singapore and Malaysia still use cash locations to send out money,” he added. “In different locations, they have different occupations. More value transactions come from Japan but from Malaysia, the amount they send would be smaller.” 

According to Lines, 60% of remittances come via credit to bank account, 30% to 40% is cash pick up, and the other services fall into the remaining percent. 

Strong peso 

The stronger peso is not affecting their remittances according said Lines. OFWs and their dependents are among those who suffered from the appreciation of the peso against the dollar, slashing the peso equivalent of the remittances.  

“The money coming in is still very strong that’s why last year we were still able to grow 5% to 6%. The only difference is the mode of pay out in peso or US dollar,” he said. 

MoneyGram expects to continue growing its business this 2013 by double digits, said Alex C. Lim, the Philippine country manager.

The growth will be driven by the continuous remittance of overseas Filipino workers (OFW) in the US, Hong Kong, Singapore, Saudi Arabia and Qatar, Lim said at the press briefing.

According to the World Bank, in 2012, the Philippines ranked 3rd after China and India in terms of remittances received, amounting to $24 billion. In terms of remittance origin, MoneyGram said Saudi Arabia is second highest with $28 billion.

The Philippine Overseas Employment Agency (POEA) lists the following as the top overseas-employment destination as of September 2012:

• Saudi Arabia with 175, 953 OFWs located there
• United Arab Emirates (UAE), 129,419
• Singapore, 73,396
• Hong Kong, 56,910  
• Qatar, 54,261

Resilient remittances

Personal remittances from abroad reached $23.8 billion in 2012, an all-time high.

The annual figure, which includes personal and capital transfers to the Philippines, translates to a 6.4% growth from 2011’s total, exceeding the 5% growth target the government has set.

Analysts and the government have stressed that the continuous growth — even though the pace has declined from double-digits in previous years — proves that OFW remittances stay resilient despite the gloomy economic situation in most host countries in the west. 

Remittances are a major economic growth driver for the Philippines, accounting for about 8% of GDP in 2012. 

According to the Bangko Sentral ng Pilipinas (BSP), this resiliency is attributed to workers in the Middle East and Asia, as well as improved bank network.

In 2012, MoneyGram grew its Philippine network to 9,500 locations nationwide. The company also pioneered direct remittance to bank accounts in partnership with 20 financial institutions, the largest of which is BDO Unibank Inc.

MoneyGram recently reported money transfer fee and other revenue constant currency growth of 13% and transaction growth of 14% for the fourth quarter and full year 2012. This growth has been fueled by a growing agent network.

“We operate in a $500 billion and growing industry and have consistently outpaced the industry growth to capture market share through a well designed strategy. This is an important milestone but we are not stopping here,” said Pamela Patsley chairman and CEO of Moneygram. – Rappler.com