MOBILE BANKING

& M-Commerce
The Philippine Experience

Regulatory Framework on Electronic Payments

Branchless Banking

Provide financial access

to the “unbanked” and
bring them into the
formal economy

FOLLOW THE FILIPINOS

Mobile Banking & M-Commerce

AGENDA
The Philippine Banking Scenario
Evolution of Mobile Banking &
M-Commerce in the Philippines
Major Issues
Legal and Regulatory Framework
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The Philippine Banking Scenario

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 The Philippine Banking Scenario

Internet

Mobile
Phone
ATMs
- An ADB funded survey of
- Mobile phones
- As of June 2007 microfinance clients in
are normally used
there are 6,967 “frontier” areas said that
to access and
ATMs nationwide although 54% have access
manage accounts
but only 73 are to internet, only 17% use
with the banks
rural bank ATMs such services.

- Concentration in - Where communication/

urban centers internet services are not an
issue, computer literacy is
still an issue
The Philippine Banking Scenario

Overseas Filipino Workers (OFW)

„ About 10% of 89 million Filipinos

work abroad

„ Remittance - US$14.4 bn (2007)

Š 13.2% higher than 2006 level
Š 10.0% of GDP
The Philippine Banking Scenario
UNSERVED MARKET
(Entrepreneurial Poor)
„ 99.6% of total business are small
and medium-sized enterprises
„ Filipinos in the bottom 30% of
poverty manage at least two
microenterprise activities
„ 4.1 million families belonging to the
lowest-income strata are engaged in
microenterprise activities
Source: National Statistics Office 2001
Evolution of Mobile Banking

Mobile Phone
As Electronic Wallet
 Evolution of Mobile Banking

•Withdraw from ATMs

•Balance/Change MPin
•Purchase Goods/Services

BANK
ISSUED •Transfer Funds
ELECTRONIC •Purchase Goods/Services
ACCOUNT
•PayBills
•Remote Purchase
•Lock/Unlock/Change Pin
Smart Money Features
Smart Money is a MasterCard electronic
product issued by Banco de Oro and
co-branded with Smart
Telecommunications Co.

Smart Money is a reloadable cash card

linked and managed thru a mobile
phone – the SMART cell phone.
Smart Money Features
Application Procedure:
„ Subscriber goes to Smart Wireless Center to get a
card
„ Smart frontliner does the following:
Š Validates if client is Smart subscriber
Š Asks for valid ID and asks subscriber to fill-out
an information sheet
Š Guides subscriber on how to activate the card
in the Smart cell phone
Š Once activated, subscriber can reload the
Smart Money Card
Smart Money Features

Loading Channels
„ Mobile Banking
„ Over-the-counter at Smart Wireless Centers
„ Card-to-card transfers
Smart Money Features
What can it do?
„ Transfer funds (Wallet to Wallet)
„ POS terminal purchases
„ Withdrawal via ATMs (BDO, ExpressNet
and Megalink)
„ Remote M-Com purchases
„ Virtual card purchases
„ Reload prepaid airtime
„ SMS notification of all transactions to both
sender and receiver
G-Cash transaction using mobile phone
and sending an SMS

Remote Re-
Merchan loading
t (Airtime
Paymen Load,
ts Games,
Internet)
Money Transfer
(P2P)
Domesti
c/
Internat Bills
ional Payment
Money
Remitta
nces
 One-time OTA Registration using G-Cash Menu

Globe Svcs+ Globe Svcs+

myGlobe Rmv Favorites
Globe Svcs+ myFavorites Power Link
Phonebook+ G-Cash

1. 2. 3.

From the Scroll down and look Scroll down and look
cellphone’s Main for myFavorites for G-Cash Menu and
Menu, go to Globe Menu item and Click Click it.
Services (Globe it.
Svcs+) Menu and
Click it.
 abc 16 abc 20 abc 20
Mother’s Maiden First Name? Last Name?
Name?

Maria Gomez Julia Santos

7. 8. 9.
Enter The Complete Enter First Name (up to Enter Last Name (up to
Maiden Name of your 20 characters) and Click 20 characters) and Click
Mother (up to 16 OK. OK.
characters) and Click OK.
 2882
abc abc Thank you Julia Santos for
40 11 registering to electronic cash on
08/12/04 at 10:30 a.m. You may
Address: Telephone No.?
now use electronic cash features.
For more info, reply to this msg
5 Santol St, Proj 4, QC
028889999 with INFO. Ref. . 13131

10. 11. 12.

Enter the your Enter Telephone No. You will receive a
complete Address (up with area code (up to confirmation message
to 40 characters) and 11 characters) and after sending
Click OK. Click OK.
 Customer Cash-in
1 2 3 4

G-Cash Form
•Customer details From: 2882
•Recipient details Remittance Company A
•Amount has credited you with
1,000 of G-Cash on

+
4/28/04 at 10:00am. Your
balance is now P2000. Ref
# 14145.
X%
Service
+ Fee Frontliner:
a) Verifies identity of
customer
b) Processes transaction • Recipient receives SMS
Customer goes c) Collects payment
to an int’l or Customer fills advisory of G-Cash transfer
d) Sends G-Cash from
domestic up G-Cash Form, outlet’s service unit to • Outlet’s service unit
remco to remit shows valid recipient’s mobile no. receives SMS
G-Cash to a ID and gives e) Issues AR and OR acknowledgment with
beneficiary cash-in amount
(exchange cash and service fee confirmation number
for G-Cash)
 Customer Cash-out
1 2 3 4

From 2882: You

500 1234 have credited Local
Outlet with 1000 of
G-Cash on 4/28/04
at 10:00 a.m. Your
2882917899999 balance is P1,500.
Ref. # 12345
9

Subscriber keys in
+
Frontliner:
a) Ensures that send G-Cash
subscriber is command containing
Customer registered to G-Cash PIN, amount to be • Subscriber receives
requests for service cashed out, and SMS advisory of G-
cash-out at b) Verifies IDs sends to the outlet’s Cash transfer and
local Outlet. c) Ensures that service unit. gets cash
Shows IDs and customer pays for Outlet’s service unit • Outlet’s service unit
fills up form. cash-out fee receives G-Cash. receives SMS
advisory of transfer
 Agent’s Cash-Out
(Settlement)
Globe settles with partner through
depository bank
G-Xchange Bank Partner

At the end of the day, Receives Receives

checks value in instruction notification
partner wallet to transfer from bank on
Instructs bank to - G-Xchange transfer to
transfer amount to Account own account
Partner’s account + Partner
through bank’s Account
Electronic Cash
Management System
(CMS)
 G-CASH extends the services of
government agencies and private
organizations - -
• Bureau of Internal Revenue (BIR), in partnership with the
Land Bank of the Philippines (LBP), for payment of:
¾ Annual business registration and Income taxes

• Rural Bankers Association of the Philippines (RBAP), through

the support of USAid, for micro-financing
¾ Text-A-Payment; Text-A-Deposit;

• In the pipeline, G-Cash will enable payments for:

¾ Professional Regulation Commission (PRC) for renewal of
professional license
¾ SEC, for payment of i-View
¾ DBP, Government e-payment gateway
Evolution of Mobile Banking

Benefits for Consumers

Cost savings and convenience

Time savings and more time

for productive activities

Minimize cash-on-hand /
transit risk
Evolution of Mobile Banking
Benefits for Banks
Increase revenues with new
fee-based service
New business opportunities
(i.e. remittances)
Higher client satisfaction
through better and more
convenient services
Low transaction cost
No huge capital or operating
expenses required
Major Issues

Entry of non-bank institutions offering

electronic banking products

Prevention from money launderers

Protection of consumers of e-banking

products
Policy and Regulatory Environment

Electronic Commerce Act

(R.A. 8792)

The General Banking Law of 2000

(R.A. 8791)
Entry of Non-Bank Institutions

Settlement
Banks
Policy and Regulatory Environment

Sec. X621 of Manual of Regulations for

Banks (MORB) – Guidelines on Electronic
Banking Services;

Sec. X169.2 of MORB – Outsourcing of information

technology systems/processes;

Circular 471 - governs the registration of foreign

exchange dealers/money changers and remittance
agents;
Circular 511 series of 2006 -
Guidelines on Technology Risk
Management;

Circular 542 series of 2006 –

Guidelines on Consumer Protection
for E-Banking
Prevention Against Money Laundering

Know Your Customer (KYC)

Smart Money – filled-up applications forms and
face-to-face registration at Smart centers and bank
branches
G-Cash – Over-the-air registration; present valid ID
for every cash-in and cash-out transactions.

Limits
Transaction Limit – P40,000 per day (USD1,000)
Load Limit – Aggregate amount of P100,000.00/month
(USD2,500)
Other Regulatory Policies

CIRCULAR 563 dated 16 March 2007 –

allows rural/cooperative banks to invest in
ATMs as non-financial undertaking

MB Res. No. 31 dated 10 January 2008

Approved to consider the accreditation
process for membership of Bancnet and
Megalink as compliance by rural and thrift
banks with the outsourcing and e-banking
requirements under Ss X169.2 and Ss
X621.4 of the Manual of Regulation for
Banks (MORB)
Other Regulatory Policies

CIRCULAR NO. 564 dated 3 April 2007 –

Guidelines governing the acceptance of valid
identification cards (IDs) for all types of
financial transactions, particularly those
residing in remote areas to encourage and
facilitate remittances of OFWs through the
banking system
Capacity Building

Creation of Core Information Technology

Specialist Group (CITSG) to address
electronic banking issues like mobile banking.
END OF PRESENTATION

Thank You!
Presented to the ASEANPay Steering Committee by:

Bella S. Santos
Director
Payments and Settlements Office
Bangko Sentral ng Pilipinas

Presentation Slides Courtesy of:

Raymond O. Estioko
CITSG, BSP
restioko@bsp.gov.ph
www@bsp.gov.ph