Closing the gap in overseas remittances for Filipinos

SIMON CALASANZ—CONTRIBUTED PHOTO

If, like millions of Filipinos, you’ve ever tried to send or receive money from overseas, you know that can be a process packed with hurdles and headaches.

I remember when a former colleague now based overseas was attempting to send money into the Philippines to pay for urgent house repairs after her parent’s home in the Visayas region was devastated by a typhoon.

What should’ve been a straightforward transfer turned into a slow, stressful ordeal, bogged down by delays and fees.

For a country like ours, where remittances are a pillar of the economy and deeply woven into the fabric of Filipino society, this situation is unsustainable.

As more Filipinos seek employment opportunities overseas—whether in health care, education, and hospitality— the payments ecosystem must evolve to help alleviate this pain point for those who rely on it the most.

Support at home and abroad

The Philippines was the fourth-largest recipient of remittances in 2022, after India, Mexico, and China, with $38 billion worth of inflows.

This accounted for around 9 percent of the country’s GDP (gross domestic product), according to the World Bank.

Addressing this growing demand is crucial.

At Mastercard, we are motivated to simplify the remittance process for those who depend on it to support families, be it to pay medical bills, cover everyday expenses, or urgent house repairs, as in my case.

The welcome news is that the Bangko Sentral ng Pilipinas is finalizing a blueprint for instant cross-border payments, collaborating with other central banks in the Asean region to strengthen payment connectivity. This effort will support and facilitate international trade, investment, and other economic activities.

Understanding and tackling pain points

While these developments are promising, it is also important to have a deeper understanding of user behaviors and pain points.

To that end, we developed the Mastercard Borderless Payment Report, a global study that sheds light on cross-border and domestic payment experiences for more than 11,000 participants in 15 countries, including the Philippines, to do just that.

The report revealed a growing demand for cross-border payments in the Philippines, with half of the respondents expecting to increase their cross-border transactions over the past 12 months.

Moreover, 87 percent of small and medium-sized enterprises (SMEs) are eager to expand their business operations internationally.

Yet, the current reality of cross-border transactions in the Philippines has fallen short of customer expectations.

A quarter of SMEs have experienced an issue with cross-border transactions resulting in a late or failed payment. Thirty-eight percent of consumers cites lower transaction costs as the most important factor when choosing a brand or company for cross-border payments.

The thorny issue of fraud and scams is also concerning, with 38 percent of consumers having been a victim of fraud or scams when making a domestic payment and 30 percent when making a cross-border payment.

Solutions for a growing challenge

Tackling these pain points requires more than individual efforts from companies or regulators—the demands cross-industry collaboration and partnerships.

At Mastercard, we’ve made strides in addressing fraud.

In 2023, Mastercard prevented $20 billion in fraud losses globally with its AI-powered cybersecurity solutions.

Our partnerships with banks and payment service providers in the Philippines focus on leveraging digital technologies for faster, more secure, and more efficient cross-border payments.

For example, our send-to-card service within Mastercard Move’s money movement portfolio allows overseas Filipinos to transfer money almost instantly to an eligible Mastercard debit, prepaid, or credit card issued in the Philippines.

The service enables money movement that empowers people and businesses to transact with confidence.

Building a prosperous future for all

Ultimately, sending money home should be simple and straightforward, allowing support across continents.

As remittances grow during the upcoming holiday season, banks, payment service providers, and governments must continue to collaborate to improve both infrastructure and user experience. Together, we can open doors to greater inclusion and improve the lives of millions of people in the Philippines. —contributed INQ

The author is country manager for the Philippines of Mastercard