The following case study offers a comprehensive view into the regulation, service, and ecosystem design that has led to the current state of play for mobile money in the Philippines. To be sure, the market is one of the most advanced in the world, but in recent months the limelight has gone mostly to the runaway hit that is M-PESA.

Mobile money success has materialized in the Philippines – but compared with Kenya it’s come more gradually and to a more measured degree. We won’t compare the two markets in this case study, but one point worth highlighting is the different approaches taken in each market to building a distribution network.

There are clear differences between the distribution networks of SMART Money and G-Cash, but even stronger ones when compared with that of M-PESA. Safaricom has benefitted immensely from leveraging their airtime network to deliver mobile money. In the Philippines, SMART Money and G-Cash agent networks are comprised of some mix of third parties – bank branches, pawn shops and retail chains. Unlike M-PESA, load or airtime retailers play a smaller role and the benefit of control over the agent network has not been realised to the same extent as Kenya.

Why has this been the case?

1. Load Incentives

One argument is that the proposition mobile money providers can offer to load retailers is diminished in the Philippines given that they make commissions in excess of 10% on airtime. Thus, the pitch of earning less than 3% from facilitating cash in/out is less appealing for some agents.

2. Regulation

Until recently, each individual agent required a Remittance License to become a mobile money agent. This involved submission of paperwork as well as attending a 1-day AMLA training seminar – something particularly difficult for smaller prospective agents.

Both of these factors have informed the strategies of Globe and SMART, each of whom have their own approaches to distribution. But what benefits have providers like Safaricom been able to realise by tightly controlling their agent network?

1. Price

Safaricom has been able to set consistent service fees for its agent network. This makes it easier for customers to grasp the rates and manages their expectations when interacting with agents. By comparison in the Philippines, a slightly different proposition is offered to different types of agents, which in some cases results in different fees.

2. Branding

In any developing market, there is fierce competition for display space at the point of sale. Since Safaricom has some control over their agents, they can influence the prominence of branding to a large extent. A direct comparison to providers in the Philippines is different here. Do customers associate the BDO brand equally with SMART Money, or the notion of transacting in a pawn shop with the G-Cash signage?

3. Customer Experience

Since they work with a distribution network over which they have some control, Safaricom can influence the customer experience staff deliver, whereas Filipino mobile money players have the task of influencing third parties.

Control of the agent network has clearly played to the benefit of Safaricom, but Globe and SMART have also been highly successful in creating an agent network – and there are signs now that each plan to make greater use of their network of load retailers going forward:

Globe has received approval from the BSP and Anti Money Laundering Council to change the way AMLA training is administered, which will remove operational and financial barriers to leveraging load sub-dealers as mobile money agents. The new agreement enables Globe staff to administer AMLA training remotely to load sub-dealers and to do so under the auspices of a group level license (rather than individual license for each agent). SMART too is making significant headway in this space via initiatives like Hapinoy (particularly relevant to the base of pyramid segment) and others. Each of these strategies marks a significant departure from the current state of play in the Philippines and the start of an exciting next chapter.

Read the case study for a full review of the Philippines and share your thoughts below.