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Mobile Money as conduit for Conditional Cash Transfers in the
Philippinespresented at
the CPR South Conference in Maropeng, South Africa 11th of September 2014
Erwin A. Alampay & Charlie CabotajeCenter for Leadership, Citizenship and Democracy (CLCD)
NCPAG -University of the Philippines
Conditional Cash Transfers (CCT)in Philippines
• Global trend in CCT in the world
• Dramatic increase in CCT as a strategy for poverty alleviation in the Philippines
1,012,195
2,278,559
3,121,530
3,937,5914,309,769
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
2010 2011 2012 2013 2014-2016
CCT Beneficiaries Country-wide
Source: ADB
Photograph: The Guardian/Vanderlei Almeida/AFP/Getty Images
Growth of CCT in the Philippines
1,009,025,500.00
6,274,887,500.00
10,035,585,300.00
13,151,920,900.00
30,909,950,200.00
33,908,902,800.00
0.00
5,000,000,000.00
10,000,000,000.00
15,000,000,000.00
20,000,000,000.00
25,000,000,000.00
30,000,000,000.00
35,000,000,000.00
40,000,000,000.00
2008 2009 2010 2011 2012 2013a
Amount funded annually
Amount funded annually
3300% increase in 5 Years!
Challenge of distribution
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013a
Proportion of funds released thru GCash
Other conduits
Released thru Gcash/Gremit
Overall, GRemit only serves around 12% of CCT beneficiaries, but this peaked at 29% in 2011.
However, the value has increased from Php980M to Php4.08B (peaking at Php6B in 2012) passing thru GRemit
This also varies across regions
BUT IS IT BETTER?Cheaper?More efficient?More secure?
Distribution
• Before it was done quarterly (every 3 months), but now it is done bi-monthly
• Benefits are 500/mo; 300/child (up to 3children)== ranges from 1600 to 2800 (if done bi-monthly)
• If done monthly, it would range from Php800-1400
Transaction costs for DSWD
Conduit (period) Cost/Remarks
Cashcard initial Php50, no transaction costs thereafter (Landbank ATMs); Php20 other
ATMs (interbank fees)
Philpost Php50
GRemit (2010-11) Php75
GRemit (2012) Php 60 (negotiated)
Mlhuillier (2013) Php42 (Gcash was disqualified/late)
GRemit (2013) Php42 (Mlhuilllier did not participate, 42 became the ceiling set, LBC was
diqualiflied)
Reasons for using GRemit
• Pragmatic- need for more direct/closer channels of delivery because of from that transportation expenses was greater than beneficiaries were receiving;
• Perceived Cost savings (compared with other alternatives (e.g. using helicopters; boats)
• Easier logistically to find partners
Data Gathering
• Interview with DSWD-CCT region IV
• Interview w/DSWD Central Office
• Field Observations
• Survey (n=192) results from CCT implementation in field
Succeeding Surveys and field observations were
conducted in 4 other provinces (but survey
results are not yet included here)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013a
Region IVB CCT Conduits
Other conduits
Region IVB Released thru Gcash/Gremit
31,791,500.00
25,017,500.00
10,932,700.00
25,831,100.00
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013a
San Jose, MO, CCT Conduits
Other conduits
Released thru Gcash
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013a
Mindoro Occidental CCT Conduits
Other conduits
Released thru Gcash
Observations regarding CCT distribution
• m-Money was not really used
• G Remit Merchant partners are limited by the number of people/desks they set-up
Observations regarding GRemit CCT distribution
• Distribution is manual, and not simultaneous
• Long lines occur waiting for merchant partners to set-up, even if processing may take only a minute/beneficiary
Observations
• Security remains a problem
NOT MORE EFFICIENTNOT MORE SECURE
Other Observations
• Temporary markets/vendors follow where the CCT Distributions are set-up.
Comparison of M-Money costs for sender
NOTE: There’s also a one-time initial Card Application fee of Php100 for SMART
SMART Money GCASH
Remittance Range
Charges Total (Max) (for sender
Charges (Php20 per 1000)
Ph1-Php500 Php5 Php5 Php20
Php 501-1000 Php5 Php5 Php20
1001-1500 Php 5 + 2.5 Php7.50 Php40
1501-2000 Php 5 + 5 Php10 Php40
2001-2500 Php 5 + 7.50 Php12.50 Php60
2501-3000 Php 5 +10 Php15 Php60
above 3000 Php 5 + 2.50/Php500 above 1000
Php 15 ++ Php80++
Comparison of m-money charges for recipientRemittance Range
SMART thru ATMS
SMART merchant (1% per tnx)
Gcash merchant
Ph1-Php500 Php5 (BDO); Php 15 other networks
Php 1-5 None
Php 501-1000 Php5 (BDO); Php 15 other networks
Php-5-10 None
1001-1500 Php5 (BDO); Php 15 other networks
Php10-15 None
1501-2000 Php5 (BDO); Php 15 other networks
Php15-20 None
2001-2500 Php5 (BDO); Php 15 other networks
Php20-25 None
Comparison of m-money Costs for DSWD/beneficiary (total)
Remittance Range
Current GRemitmodel
SMART Money
Gcash Directmodel
Ph1-Php500 Php42 Php10 Php20
Php 501-1000 Php 42 Php 15 Php 20
1001-1500 Php 42 Php17.50 to Php 22.50
Php 40
1501-2000 Php 42 Php25-30 Php 40
2001-2500 Php 42 Php32.50-Php37.50
Php 60
2800 Php 42 Php 43 Php 60
CostThreshold
Initial Survey Results
• Beneficiaries farther away were more resistant to using mobile money, and those nearer were also more willing (considering that ATM option would also be there)
• Most of the respondent beneficiaries were SMART subscribers (also validated in 4 other CCT areas)
• Many were more familiar with SMART Padala centers
• Those who have had previous experience using SMART money were more likely to report interest in using this option
In 4 other areas: SMART and Gcash Centers were presentBUT resistance was absence of signals; electricity
Stages of Access*
MENTAL ACCESS: 136/192 were interested or willing to receive CCT directly to the cellphone (71%)
MATERIAL ACCESS: 49% (95/192) have a cellphone; 86 (or 90%) are subscribed to SMART
SKILLS ACCESS: 34% (65/192) know how to receive money using a cellphone
USAGE ACCESS: 33% (63/192) have used SMARTmoney1.5% (3/192) have used GCash
* Adopted from Van Dijk (2009), as conceptualized in Alampay & Bala 2010
No cell:Can’t affordNot a priorityNo signals
Interest:No linesNo ID neededLess transport costGood in Emergency
RESULTS
• OWNERSHIP of a cellphone was not statistically significant as to whether they were interested in m-money for CCT (Chi=2.89, df=1, a=.089)
• Pre-existing Knowledge to use m-Money was statistically significant to willingness to use this as a conduit. Those who know were more willing Chi=7.729, df=1, a=.005)
• Distance to known claim/redemption was also statistically significant to willingness (Chi 12.96, df=1, a=.000) Those closer were more willing.
Findings
In actual GRemit implementation:• Benefits were not apprent: Not more efficient, not more secure• Implementation was no different, and technology model was not
developed• Actual overhead cost (for distribution of transfers) not yet known,
but rather based on bidding; unknown/variable costs for beneficiaries
Feasibility of using a mobile money model:• Projected cost using SMART Money or Gcash can be potentially
lower, especially for smaller and more frequent cash transfers. • SMART would be a more technically feasible alternative should
direct transfers to cellphones are considered (more centers, subscribed to by more beneficiaries)
Field Evidence:Other Emerging Models
• UNDP- Cash for work program (post-Haiyan)
• Globe Banko- interest earning mobile based bank account (applied by Mercy Corps)
• USAID-SIMM Project ---building up m-money use in the local economy (salaries; loans, utility payment)
• Other country experience (see Aker et. al 2011; Nigeria e-Wallets for farmers)
RECAPITULATION
• M-Money for conditional cash transfers is Technologically feasible in some areas– Based on Typhoon Haiayan experience
– Consider availability of complementary systems/services
• M-Money if applied in CCT can be financially more cost efficient
• Need to strenghten local m-money ecosystems
What needs to be done
• Developing local m-money ecosystems
– To reduce need to cash out
• Education
– On use
– Alternative systems (SMART, Gcash, Globe Banko)
– About variance in fees
• Posisble fees in ATMs