It is not known as a hi-tech hub, but recently the Phillipines has become home to a technology that looks set to sweep the region. G-cash, an e-wallet solution that allows mobile phone users to buy items in shops and pay bills without cash or credit cards has even attracxted international attention.
When Joey Mendoza, head of G-Xchange, part of Globe Telecom Philippines, landed in Bangalore, India, to address an international summit on innovation recently, he received a call from London that G-cash had won the international award for the best mobile M-Commerce application service.
What's remarkable is that within six months of the launch of the G-cash facility, Globe Telecom Philippines has attracted 1.2 million subscribers. Compare this to just over 400 subscribers to the UAE Exchange, a similar wallet technology launched in January 2005 over here. Western banks and credit card companies have not faired much better, still grappling with systemic problems.
Only Japan, with its DoCoMo technology is ahead with about three milllion users. G-cash is a home-grown mobile commerce solution co-developed by Globe Telecom Philippines with Sun Microsystems Philippines and other partners. It has over 200 partner institutions representing 2,000 outlets along with 17 international partners.
Globe has also recently extended the G-cash payment facility to Philippine-based online games; this allows local players to top-up additional playing time using this ingenious mobile wallet. However, Jovey's target is Filipino expatriates, who are estimated to remit over $18 billion a year.
Why has G-cash has become such an instant hit? Credit card penetration in the Philippines is only four per cent and 90 per cent of the retailers don't have the facilities to honour credit cards. Even in rural areas, the banking facilities are inadequate. Besides, expanding banking and credit card facilities can be very expensive.
The scenario is similar in many developing countries including India. The penetration of mobile phones, however, has been phenomenal in Philippines at 45 per cent, as high as many developed countries. In the next two years, Jovey estimates that figure will go up to 60 per cent.
There's no doubt about it: G-cash is expanding. Globe Telecom has tied up with India's largest GSM service provider - Bharti Cellular - and Jovey expects growth to be ten times faster than in the Philippines.
Jovey is also talking to a few carriers in the US and hopes to clinch a deal soon. He's certain that G-cash will be a hit in the Arabian Gulf countries, and his business development teams are already exploring the opportunity.
How G-Cash Is Different
It's interesting to observe how G-cash has made its niche in the mobile banking space. "The logic is simple," says Jovey. "If banks have been slow to build user-friendly and affordable solution through the mobile phones, then someone has to build these solutions on the mobile phone itself. G-cash therefore puts a wallet into the mobile phone that is cashless and cardless.
So you don't have to be a credit card holder or have a bank account to have G-cash in your wallet." The big difference however is that G-cash's target is micro payments, unlike M-cash offerings in Europe or in the UAE. Even the UAE Exchange's Wallet scheme needs to have reasonable payment size to operate.
For expatriate Filipinos, the G-cash solution gives greater control of their earnings. They can pay all their bills, taxes, children's school fees and even treat their kids to a Burger King meal from their place of work abroad. "Typically, a spouse and relatives misuse the remittance sent. So you get to see several unpaid bills even when money is sent," says Jovey.
G-cash is expected to be more popular among Indians as well once the service gets started. Clearing the regulatory hurdle, however, may take a few months.
The Business Proposition of G-Cash
G-Cash does not compete with Western Union or the banks. G-cash is concerned only with micro payments of up to one hundred US dollars. This works well for banks as well. It costs banks about 50 cents to process payments, which is negligible for G-cash. Currently, about 15 banks in the Philippines are co-operating with G-cash on micro payments.
Regulators like G-cash too. Unlike other modes of transaction, G-cash operators know exactly who has sent money, to whom and when. Like an ATM, there is a limit on the amount one can draw or send in a day.
G-cash has been developed on an open platform and is not dependent on a single service operator. Despite significant leaps in mobile banking technology using it without any apprehension will take a while. Several innovations are in store, especially at the retailing space. Right now, mobile banking does seem like the next frontier for m-commerce, and G-cash seems ready to ride that wave.
© 7Days 2005
