Smart Communications, the Philippines’ biggest mobile network in terms of subscriber count, has recently introduced an electronic payment system for government services.
Dubbed Smart Bayadload, the service will enable Smart’s subscribers to remit their payments and contributions to the Social Security System (SSS), Government Service Insurance System (GSIS) and the Philippine Health Insurance Corp. (Philhealth), as well as the Home Development Mutual Fund (Pag-Ibig Fund).
In a statement, Napoleon Nazareno, Chief Executive Officer, PLDT (Smart’s parent company) and President, Smart Communications, said that the new system will help individuals who pay for these services on their own in remitting funds to government.
“This service will make it much easier for about 15 million self-employed individuals and household help to become active members of these social funds and to benefit from their services,” he said, clarifying that “bayad” in Filipino translates to “payment”. Meanwhile, “load” is the local term for prepaid credits used by the country’s more than 100 million prepaid subscribers — 35 million for Globe Telecom and 70 million for Smart.
Through Bayadload, Smart users can purchase special prepaid credits from retailers, and these can then be used to pay for the services electronically. In fact, Nazareno said that Smart is considering likewise extending functionality to other government services and utilities. Smart can bank on its wide distributor network in making it easier for users to make their payments.
“Through this network, which reaches every nook and cranny of the country, we can rapidly deploy new financial services to people living at the periphery of the economic mainstream,” said Nazareno.
Mobile prepaid airtime has expanded beyond simple calls, texts and data services, Nazareno notes, and PLDT is capitalising on its nationwide retail network in providing financial services to the unbanked or underbanked. For instance, Smart’s sister company, the Manila Electric Company (Meralco), has started accepting payments through Smart’s network.
“Meralco is hoping to duplicate the success of prepaid mobile phone services by offering prepaid electricity services as part of a Smart Grid system that will help customers better manage their power consumption.” Another sister company, Maynilad Water Services, is considering accepting pre-paid payments through the mobile network.
Mobile networks have grown to become an alternative means of accessing financial services in the Philippines. While Smart has its own Smart Money facility — which includes remittance and withdrawal services — its main competitor, Globe, also has its own GCash facility. Both networks have partnered with local and regional companies like pharmacies, pawnshops and even retail stores, in offering financial services to the underbanked.
To highlight, Globe’s GCash Remit service has been used by government institutions in the Conditional Cash Transfer program meant to provide social services and assistance to the impoverished sectors.
For instance, in 2011, the Philippine government used GCash to remit PhP 1 billion (about US$23 million) to beneficiary families in its CCT program. In a case study, the Asian Development Bank Institute has suggested that such mobile services can help move the underbanked sectors to mainstream financial services.
Smart President Nazareno lauds the advantage of independent retailers in ensuring the success of these financial services. “Clearly, our retail distribution network has become a strategic tool for extending the ecosystem for mobile money transactions.” This is likewise the sentiment of local startup Ayannah in launching its “Sendah” e-payments and e-commerce service for the underbanked.
“We want to create a network of agents to collect cash and receive payments for things,” Co-Founder Mikko Perez told e27 in an earlier interview. “Eventually, Sendah will become a person-to-person network for digital transactions.”
Perez, however, argued that electronic payment services are best done by neutral parties, instead of telecommunication providers, whose main interest is to retain network loyalty. “It will require a neutral party to really make a difference,” he said, adding that mobile-based payment systems will usually gain traction through building an “ecosystem of partners.”