Telcoin’s contactless digital remittances will help Filipinos weather the COVID-19 crisis
Despite the ongoing pandemic, the Philippines’ central bank is targeting 3% remittance inflow growth in 2020. The country received more than $30B last year.
By: Jeff Quigley
Remittances to the Philippines reached a staggering US$33.5 billion in 2019, maintaining the country’s spot as the fourth largest remittance recipient globally and representing a nearly 4 percent increase in remittance flows from 2018. The vast majority of these transfers were made by overseas Filipino workers, known as OFWs, in order to support loved ones back home. Inbound remittance is a lifeline for millions of people in the Philippines, and the money OFWs send home amounts to more than 9 percent of the country’s gross domestic product. The average OFW sends US$446 a month back to the Philippines, where an entire household’s monthly income is just US$175.
Despite fear and uncertainty surrounding the ongoing COVID-19 pandemic, the Philippines’ central bank is still targeting a 3 percent growth to the inbound remittance market for 2020. With many OFWs working in the service industry, and many countries that host them in varying degrees of lockdown, it appears that figure could be difficult to reach. But historically speaking, Philippines-bound remittances have been largely unfazed by global downturns — inflows actually grew during the 2003 SARS outbreak, the 2008 financial crisis, and the 2016 oil crash.
“Filipinos found a way to send home remittances throughout the global financial crisis and every other economic downturn experienced around the globe,” wrote one senior economist at ING Group in February. “While the coronavirus presents a new challenging landscape for these flows, we expect OF remittances to post modest growth from the average 3–4 percent growth clip per year, given the altruistic nature of the flows.”
If the Philippines is to meet expectations, digital remittances will play a more important role than ever. The country’s main island of Luzon, which contains the capital city of Manila and is home to nearly 60 million people, is on a strict lockdown. President Rodrigo Duterte last week extended the lockdown order through at least May 15. That means no queuing up at physical remittances shops like Western Union or the local bank branch for the foreseeable future. Physical cash is a known vector for disease transmission, and people will be more eager to explore non-traditional remittance options even when the lockdown has long ended.
App-based services like Telcoin are safer for both sender and recipient, and our focus on partnering with mobile money platforms like GCash provides a wide range of practical use cases — including bill payment, online shopping, and P2P transfers.
In addition to safety, digital remittances are also generally much more affordable than cash pickup or bank transfers. Moreover, a Telcoin remittance can be sent in a matter of seconds — not days — and there’s no time wasted traveling to a physical shop and standing in line. Let’s look at transfers from Canada to the Philippines as an example.
According to the data above, OFWs send US$446 a month back to the Philippines, which rounded down would be US$200 twice a month (given that Canadian companies usually pay biweekly). The following chart breaks down the speed, cost, and convenience of 10 incumbent remittance providers serving the Canada-Philippines corridor (according to World Bank data from the first quarter of 2020):
Note that only one of the 10 (and indeed just one from the total list of 25 companies serving the Canada-Philippines corridor) offers the ability to receive a remittance into a digital wallet. To reiterate on the above, current lockdowns would eliminate at least seven of the above 10 options that only allow cash pickup. And more importantly, Telcoin is targeting a maximum fee of just 2.5 percent, or US$5 on a US$200 transfer — the cheapest option available in this corridor. With the impact of lost jobs and reduced hours already being felt across the globe, consumers deserve an affordable option that puts more money in their (digital) wallet.
Telcoin is in the midst of launching a closed beta of its remittance service from Canada to the Philippines. If you’re an OFW living in Canada, please sign up to be an early tester here. As Telcoin gains regulatory approval in more countries, we’ll expand our offering to further support OFWs and diaspora communities everywhere.
Telcoin. Send money (to the Philippines) smarter.