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Demand for Domestic Payments in the Philippines: Know Your Market


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Demand for Domestic Payments in the Philippines: Know Your Market

  1. 1. Demand for Domestic Payments in the Philippines: Know Your Market<br />Research Sponsored by:<br />
  2. 2. Study objectives<br />The domestic payments research in 2010 was intended to provide a clearer understanding of the following:<br /><ul><li>Composition of the current market for domestic payments using demand side data
  3. 3. Latent demand for remote payment services
  4. 4. The main drivers causing non-users to become users and users to switch between payment service providers
  5. 5. The ‘pain points’ of payers and their recipients with respect to price sensitivity, accessibility, speed of delivery and trust for payment service providers.</li></li></ul><li>Methodology<br />
  6. 6. Lenses<br />Personal payment instruments<br />Money transfer (MT)<br />Bills payment (BP)<br />Loan payments (LP)<br />Payment methods<br />PSPs<br />Formal PSP—banks, pawnshops, remittance agents, mobile money<br />Informal PSP—friends, driver, etc<br />Direct pay<br />At biller payment center<br />Population<br />Payers: Made a payment in last 12 months<br />Non-payers: Did not make a payment in this period<br />
  7. 7. Findings: 1. Focus Groups<br /><ul><li>Primary purpose of MT is for emergencies or else household expenses, followed by education
  8. 8. Main PSPs used are pawnshops (ML, Cebuana L. & other), Western Union, LBC and the bank transfer services
  9. 9. Price confusion: generally did not know price structures
  10. 10. Respondents vaguely aware of mobile money services
  11. 11. Brand confusion over Smart Money/ Smart Money Transfer and GCASH/ GCASH REMIT
  12. 12. Both rural and urban residents make use of informal services</li></li></ul><li>Findings:2: Intercept survey <br />Suggests that women are more likely to be payers<br />High awareness of five payment service providers: LBC, M. Lhuillier, Western Union, CebuanaLhuillier & payment centers<br />GCASH used within the NCR and in urban areas<br />Smart Money users send money to a mix of urban and rural areas outside the Metro<br />Convenience and speed appear to be the major reasons for choosing service providers for select users<br />Price sensitivity suggests that LBC, Cebuana and Western Union are over-charging<br />
  13. 13. Findings 3: National payer profile (All adults 95% CI, +/-3%)<br />
  14. 14. National adult survey: Who are the users of remote payment services?<br /><ul><li>More female than male are users (68% vs 32%)
  15. 15. 76% of the users are classified under Class D (poor), while 19% belong to class E (very poor) and 5% to Class ABC (upper and middle classes)
  16. 16. Most households where they live have electricity (96%), cellular phones (71%) and running water (80%)</li></ul>Other information:<br />32% of users indicated they were willing to pay PhP 50 (median) for remote bill payment services, e.g. via mobile phone or messenger<br />24% report receiving money from abroad in the last 12 months<br />7% of total users then on-send money to others (median: PhP 3,000)<br />
  17. 17. Findings 4: Awareness and usage <br />n=1000<br />multiple responses<br />
  18. 18. Findings on users of GXI and Smart PSPs<br /><ul><li>Less than 4% of respondents have used either GXI or Smart products in the last 12 months (Smart Money, GCASH, Smart Padala or GREMIT)
  19. 19. Mostly within the last 2-3 weeks of the survey – implying regular usage
  20. 20. GXI and Smart’s products are mainly used for sending money to other people, not paying bills
  21. 21. 33% of non-users reported that the ability to make cross-payments (GCASH<->Smart Money) would make them consider using these services
  22. 22. More granular results available from the intercept survey in NCR:
  23. 23. GCASH and GREMIT users far more likely to be sending money within the NCR (45% of GCASH users)
  24. 24. Smart Money users were split roughly 50/50 between sending money to urban and rural areas
  25. 25. Confusion on price schedule for GCASH and Smart Money is apparent, but do not like “double charging”</li></li></ul><li>Instrument usage per provider<br />n=1000<br />
  26. 26. Median amounts transferred per transaction per PSP<br />n=1000<br />
  27. 27. Users’ frequency of usage<br />n=1000<br />
  28. 28. Conjoint analysis was used to quantify consumer preferences via ratings of generic payment services<br />Four attributes: speed, price, convenience and security<br />Each with two values, creating 16 possible combinations<br />Consumers were asked to rate a series of payment services 1-100<br />
  29. 29. Findings: Price sensitivity analysis<br />Using a series of price-fairness questions, it was possible to calculate a acceptable price range for different sizes of transactions: <br />
  30. 30. Finding: Market size Domestic personal payments per month<br />n=1794<br />
  31. 31. Conclusions<br />The Filipino domestic payments market is highly competitive and maturing<br />Awareness of PSPs is high but knowledge and usage of mobile banking products and services are low<br />Users of informal service providers are a stable, geographical market<br />The demand for national domestic payments is significant, but little unmet need<br />
  32. 32. Full report is available at<br /><br />BMGF.PDP-FinalReport-dec2010.pdf<br />
  33. 33. Slide Annex<br />
  34. 34. Focus Group Discussions (FGDs)<br /><ul><li>22 FGDs across four major areas
  35. 35. Performed in mix of urban, semi-urban and rural locations
  36. 36. Primarily open-ended, qualitative questions
  37. 37. Approach: group of ‘homogenous strangers’
  38. 38. Examples of interview groupings:</li></li></ul><li>Intercept survey: Methodology<br /><ul><li>Results not intended to be nationally representative
  39. 39. Intent to get reasonable information on less-used providers and test survey methodology
  40. 40. In-person interviews with 300 respondents at payment service providers in Metro Manila
  41. 41. Interviews conducted at 13 sites including a mixture of pawnshops (e.g. ML, CebuanaLhuillier) along with money transfer services and banks
  42. 42. Trying to gather granular information on aspects of domestic payment services that are not well understood (pain points, price sensitivity, etc.)</li></li></ul><li>National payments survey: Methodology<br />Two components:<br />1. National population survey (n=1794 adults)<br />To estimate share of adults who are using remote payment services<br />As well as share making payments directly in person<br />And the prevalence of bills payment vs. money transfer transactions<br />2. National payments users survey (n=1000 adults)<br />Made a remote payment in the last 12 months<br />Used Informal or Formal payment service providers (PSP)<br />Were involved or made the decision of which PSP to use<br />Money Transfer and Bill/Loan Pay examined<br />
  43. 43. The national population survey segments total respondents<br />n=1,794<br />
  44. 44. How things stack up<br />Users<br />Deciding<br />Formal and Informal<br />Q 1000 Users<br />Populationrepresentative<br />Bill Pay, Money Transfer & Loan Payment<br />Payment Type<br />Personal Direct, Informal & Formal Payment<br />Payment Method<br />Personal Direct Payers<br />228<br />Non-Deciders<br />57<br />Users<br />1000<br />Non-Payers<br />509<br />All Adults <br />Sampled and<br />Interviewed<br />1794 HouseholdsInterviewed<br />4 814 Houses Approached<br />Not to scale<br />
  45. 45. Reasons Given by Non Payers<br />Base 28% of population<br />N=1,794<br />Q5: Why did you NOT send money or pay bills or a loan in the last 12 months (multipleresponses)?<br />
  46. 46. Payment Method vs. Payment Type<br />N=1794<br />Type<br />
  47. 47. Payment Method vs. Payment Type<br />n=1794<br />Type<br />
  48. 48. Payment Method vs. Payment Type<br />n=1794<br />Type<br />
  49. 49. Usage and potential usage of PSPs<br />N=1000<br />
  50. 50.
  51. 51. National Adult Survey of UsersUsers decide which payment method and provider they will use1000 Payment Deciders<br />
  52. 52. Users are:<br />Made a remote payment in the last 12 months<br />Used Informal or Formal payments methods<br />Were involved or made the decision of which payments service provider PSP to use<br />Money Transfer and Bill Pay examined<br />
  53. 53. Customer attrition<br />n=1000<br />Highest for Western Union, LBC and the pawnshops– those performing MT<br />
  54. 54. Why users stopped using PSPs<br />n=1000 and once used PSP<br />
  55. 55. Travel times and costs of recipients<br />n=1000<br />
  56. 56. Conjoint analysis quantifies consumer preferences via ratings of generic payment services<br />Consumers asked to rate a series of payment services 1-100<br />Four attributes: speed, price, convenience and security<br />Each with two values, creating 16 possible combinations (e.g.):<br />
  57. 57. Importance of speed and trust, less price, to consumers<br />
  58. 58. Price sensitivity:A series of price-fairness questions<br />Asked respondents to rate price regarding transaction fees:<br /><ul><li>At what price would the service be cheap but still worth it?
  59. 59. At what price would it be expensive but still worth it?
  60. 60. At what price would it be too expensive?
  61. 61. At what price would it be too cheap (raising quality concerns?)</li></ul>Approach pioneered by Dutch economist Peter van Westerndop (1976)<br />
  62. 62. Graphing the response curves to the four questions…<br />
  63. 63. Yields an acceptable range of prices to consumers<br />Certain providers appear to be over-charging, relative to consumer expectations…<br />
  64. 64. Those using informal services only form a distinct sub-group…<br />n=1000<br />
  65. 65. Usage of formal service providers by informal users <br />
  66. 66. Payment Method vs. Payment Type<br />n=1794<br />Type<br />
  67. 67. Payment Method vs Payment Type<br />N=1794<br />