Mobile phone network operators in the Philippines have found a virtual replacement for cash, allowing their subscribers to recharge airtime, make retail purchases and transfer money to one another using mobile money.
Globe Telecom, for example, has racked up 3 billion transactions valued at $180 million since it introduced “G-Cash” nearly 18 months ago. Rival operator Smart Communications has seen similar success with its mobile money scheme, launched earlier, “Smart Padala.”
Subscribers transfer the value to merchants and to one another from phone to phone via SMS messages. The messages credit the merchants’ or subscribers’ accounts. Subscribers are using it to pay for a range of goods and services, even tipping the waiters, paying bills and covering school tuition; and Filipino expatriates remit millions of from abroad this way to their families.
The subscribers can deposit real Philippine pesos with merchants, which convert this into the mobile money. Users enter special PIN codes, and the operators build extra security for the scheme into the subscriber identity module smart card inserted in the mobile phone.
“We have gone beyond credit cards because we have only 5 (million) to 8 million credit cardholders,” says Jose Roberto Mendoza, head of m-commerce business development at Globe. That compares with a population of more than 85 million, only about a quarter of whom have bank accounts. He tells Card Technology Globe has 1.2 million registered G-Cash users out of its base of nearly 15 million subscribers. About 25% to 30% of transactions are retail purchases with merchants that do not have conventional point-of-sale terminals. Smart Communications also has allowed customers to transfer funds to a prepaid account customers can use for retail purchases with a magnetic-stripe “Smart Money” card. (2006-02-28)