The Beneficiary Aspect of OFW Remittances to Rural Mindanao

By Felixberto Tero II

Remittances from migrant Filipino workers are surging at the rate of at least a billion dollars each month. While this has strengthened the peso as well as the country’s economic fundamentals, overseas remittances more importantly provide a decent quality of life to thousands of overseas Filipino workers’ (OFW) beneficiaries. Of late, formal remittance channels such as banks and money transfer agents have established modern fund transfer facilities abroad to simplify the fund transfer process and considerably reduce related service fees.

Indeed, the presence of these remittance agents overseas is making it easier for OFWs to send money back at home. Nevertheless, the same convenience is not readily available to beneficiaries of foreign remittances, particularly for recipients based in the remote areas of rural Mindanao. There are at least 150,000 OFWs sending remittances to Mindanao-based beneficiaries and mind you, not all of these beneficiaries reside in urbanized locations.

Filipinos leaving their families behind to take advantage of the better pay available with overseas employment is a conventional migrant’s tale. Many would prefer the melancholy of a dysfunctional family life in exchange for the opportunity to adequately support the financial needs of growing children, pay off mounting debts or simply seek greener pastures elsewhere in the world. A regular OFW padala or remittance in the Filipino language will definitely work to realize these dignified intentions. But on the other hand, claiming the monthly padala won’t come easy for beneficiaries in countryside Mindanao. More often than not, beneficiaries need to contend with the related risks and logistical hassles every time remittance funds become available for payout.

Banks and remittance payout outlets are often concentrated in the more urbanized districts of Mindanao. Therefore, rural-based beneficiaries are left with fewer claim options in their locality. In the end, they will have to endure at least a 20 kilometer back ride on a motorcycle or a bus ride to shuttle off to the nearest bank or remittance outlet. Imagine the security risks and transportation costs involved, especially when the OFW transfers funds in tranches, say in a given month. Sure, a beneficiary can choose the door to door mode of transfer, but then again, these payout services are often deemed unreliable in these remote parts of Mindanao.

Lucky for those beneficiaries in far-flung municipalities, where a local bank services the payout of overseas remittances. Nonetheless, you’ll be surprised at how uninformed many rural beneficiaries are in the handling of bank accounts to where remittance funds are credited. It’s either they are unaware that payout services are available with the local bank, diffident to even open an account or wary of shelling out additional money for the upkeep of account balances. Most likely, these beneficiaries would much rather course through remittance funds to another beneficiary’s bank account and collect the funds from the latter. Quite impractical, right? But this is just one of the informal payout channels at work in many countryside locations where many beneficiaries are hardly financially adept. A number of enterprising individuals even provide informal payout services for a fee to unknowing beneficiaries who can actually open personal savings or ATM accounts for this purpose at a minimal opening and maintaining balance of a little over $2 or P100. Think that’s terrible, but then again, this is a sad reality in the countryside.

Until such time that banks and remittance centers will choose to locate more of their branches in far flung municipalities, many illiterate rural folks based in Mindanao will most likely gravitate to informal payout channels rather than burden themselves with the costly and risky trips to far off commercial centers.

 

Domestic Remittance Services in Rural Mindanao

By Felixberto Tero II

 

Do you often send money to recipients from anywhere in Mindanao or even elsewhere in the Philippines?  Most likely you have a child or a relative studying at a university in another province or city.  If not, then probably you’re engaged in a small or medium sized enterprise that requires you to transfer funds every now and then.  I bet you’ve used every known means of fund transfer available in your locality, but in case you haven’t got a clue about the different channels available, allow me to give you a bird’s eye view of the various remittance outlets in Mindanao.

There are a number of conventional channels you can use to send money locally.  While international money transfer service providers turn over a remarkable volume of remittances each day from OFWs to local beneficiaries, there is also a substantial demand for domestic remittance services that has stimulated competition, in terms of fees and promos, among providers.  Below is a rundown of the players in the domestic remittance industry:      

     

Money Transfer Companies

Of course you’ve heard about Western Union, right? Lately, this global remittance company has been extensively marketing its domestic remittance services here in the Philippines through paid TV and print ads; promos on fees, membership cards and even giving free SMS load to recipients. You may also have noticed that Western Union is establishing more independent WU outlets, to lie low on partnerships with banks and pawnshops.

Domestic Couriers

Local fund transfer is an incidental service of couriers such as LBC and Aboitiz Express. They provide quick and reliable fund transfer services to and from as many cities and municipalities in Mindanao within their reach, and many of us have been patronizing this channel for many years.   

Local Banks

Want your recipient to receive remittance funds real-time and real fast?  This is possible by way of inter-branch fund transfers (you’re transferring funds through the same bank but to a different deposit account) or inter-bank fund transfer (this time funds are transferred to a deposit account held in another bank). It is typical for entrepreneurs operating in countryside Mindanao to channel fund transfer transactions with local rural banks that likewise have branches in commercial centers, where buyers and distributors are based.  

Pawnshops

Pawnbrokers have expanded their service lines to engage in domestic fund transfer as well. A widely distributed network of pawn outlets located in both urban centers and rural regions of Mindanao makes pawnshops an ideal remittance channel. Minimum fees are as low as P20 to step up a few pesos depending on the amount of transfer and the location of the recipient. Pera Padala and ML Kwarta Padala are popular domestic remittance brands operated by leading pawnshops.

 

Mobile Fund Transfers

 

At the height of the electronic reloading station hype, fund transfers via mobile phones likewise emerged to offer an instant, all-electronic and affordable means of fund transfer. Globe Telecoms introduced the electronic wallet concept behind G-Cash into the mainstream while Smart Communications launched Smart Padala which featured international fund transfer capabilities as well. Nevertheless, this mode of fund transfer proved to be useful to electronic load distributors as a payment facility for their various retailers based in remote Mindanao municipalities.  

  

To this day, informal channels for local fund transfers still exist in the rural mainstream. For a typical city dweller, it would come as a surprise to learn that rural folks actually send money through the conductor or ticket handler of a small time public utility bus or van operator. You might want to try informal channels, for adventure’s sake that is.  But then again, I wouldn’t want you to risk even a few hundred pesos for that matter. 

 

So the next time you need to send money to anybody or anywhere else in countryside Mindanao, simply browse through the abovementioned options.  I’m sure there’s one service provider to match your fund transfer requirements and preferences.

 

ATM Technology Reshaping Rural Mindanao

by Felixberto Tero II 

ATM technology is no longer a novelty in affluent nations. In fact, the term “cashless society” is remarkably at work at the heart of the financial mainstream that many transactions are completed with the use of plastic cards. That is the ATM card, debit and credit card. However for developing countries, particularly in the rural areas, it takes quite a while for investments in electronic banking technology to set in and find integration with the routines of countryside communities.

It was only in early 2005 that ATM technology was rapidly set up in a number of far-flung municipalities and provinces of Mindanao–one of the main islands of the Philippines. In barely two years time, automated teller machines have successfully penetrated the rural mainstream to become an important financial tool. Apart from providing convenience and security in the handling of personal funds, it has become a way of life amongst rural folks.

For multinational firms and businessmen operating in rural Mindanao, ATM services offered by banks present in the locality avert them from the security risks related to the physical transport of payroll funds, in millions of pesos, from urban centers to remote municipalities.

It’s actually interesting to see the contrasting effect of modern electronic banking devices set up in an otherwise laidback setting. More so with the long queues one is bound to observe in front of bank ATMs during the 15th and 30th of each month, as laborers line up to withdraw their salaries from the machine.

The ATM likewise finds purpose among the rural folks of countryside Mindanao. The thought of seeing their names printed on the ATM card makes them quite interested to open an ATM account. But more importantly, ATM accounts have become an effective alternative to costly fund transfer services.

In the past, parents based in rural Mindanao had to contend with the costs and delays prevalent with conventional remittance channels in sending allowances to children studying at the more urbanized cities of the Philippines. Today, the presence of a bank nearby and the availability of ATM services make it easier for them to send funds in real time, during banking hours.

It would probably take a few more years before ATM technology will find its way into every province and municipality of Mindanao. And this would depend largely on the willingness of local banks to invest and establish branches in areas where no banks operate. However, with the way things are going, setting up more electronic banking services in countryside Mindanao definitely holds much promise.