Remittance Continues to Play Major Role in Filipino Economy as It Hits Record Highs
by Fintech News Philippines July 27, 2023Remittances play a critical role in the Filipino economy and have significant social and economic impacts on the country: they help alleviate poverty, are a driving force behind the country’s economy, and help expand the financial sector and promote financial inclusion.
Globally, the Philippines stands as one of the world’s top remittance recipients, with data from the World Bank showing a US$ 38 billion remittance inflow, though this contrasts with data coming from Bangko Sentral ng Pilipinas (BSP) which shows the figure to be US$ 36 billion instead.
The amount makes the Southeast Asian country the world’s fourth biggest remittance-receiving nation behind only India, Mexico and China.
World’s top remittance recipients in 2022, Source: Knomad via Word Bank
The amount also makes 2022 the biggest year for the country in remittance inflows and represents a 3.6% increase from the previous all-time high of US$34.88 billion in 2021.
In 2022, personal remittances – the sum of net compensation of employees, personal transfers and capital transfers between households – continued to be a major driver of household consumption spending, accounting for 8.9% of the country’s gross domestic product (GDP) and 8.4% of the gross national income (GNI).
As the amount of remittance inflows continues to reach new records, a new Visa research titled “Money Travels: 2023 Digital Remittances Adoption” found that 71% of Filipino remittance senders and receivers surveyed are turning to digital apps to send and receive funds.
Data from German statistics and research platform Statista echo that finding, revealing that online banking and mobile apps were the second most popular remittance channels for receiving money in the Philippines in 2021, accounting for 22% of transactions.
Most popular remittance channels for receiving money in the Philippines in 2021, Source: Statista, May 2023
WorldRemit Philippines country director Earl Melivo told the Philstar in an interview in January that the pandemic triggered a drastic change in the way migrant workers and other overseas-based individuals send money to the Philippines, shifting largely from traditional means such as bringing money to traditional brick-and-mortar outlets such as banks and other physical outlets to digital money transfers.
London-based WorldRemit was among the first to introduce digital money remittances in the Philippines, allowing customers to send money overseas either through its website or mobile app.
Users can deposit money to WorldRemit’s bank account or pay using their debit or credit cards. To make sure that the money is delivered quickly and easily across the Philippines, WorldRemit has a network of local partners, which include banks, pawnshops, and e-wallet operators.
Funds can be transferred to a bank account, a mobile wallet such as GCash, Maya, GrabPay or ShopeePay, or they can be picked up in cash at a pickup location.WorldRemit has been in the Philippines since 2011. In the last two years alone, it served more than 20 million customers.
Other popular digital remittance services providers include Western Union, Moneygram, Wise, Remitly and Paypal. Western Union is a world leader in cross-border payments, having been in the market for over a century. The company offers both in-person and online transfers, and is known for its reliance and speed. It is however, often criticized for being too expensive.
The digital remittance market is expected to grow at an annual rate of 10.60% between 2023 and 2027, rising from US$1.12 billion this year to US$1.68 billion within the next five years, Statista estimates. The number of users relying on digital remittances is set to amount to 266.80k by 2027.
Featured image credit: edited from freepik
