BSP: Payments, remittances crucial to financial inclusion

CEBU, Philippines - Payments and remittances are two critical areas cited by the Bangko Sentral ng Pilipinas toward achieving financial inclusion.

"The ability to send or receive payments and remittances is an important first step toward the usage of a wider range of financial services such as savings, investment, credit, and insurance. Access to basic transactional accounts is a critical component of financial inclusion," BSP noted in its 2016 first semester report in financial inclusion.

Money transfer

Money transfers can be done using various instruments and channels.

While cash or check payments are still very common, BSP said electronic payments using cards, electronic money or the Internet are gaining wider acceptance because they are fast, cost-efficient and convenient.

Bill payments and remittances are the most common financial transactions of Filipino adults, the central bank noted.

BSP said 72 percent of adults pay bills such as water and electricity, while 63 percent experience receiving or sending money.

"Payment centers and remittance agents are the most frequently used channels for these transactions," the BSP report said.

Remittances

The Philippines is the third biggest remittance-recipient in the world, next to India and China.

More than 10 million Filipino overseas send around US$26 billion yearly to their families in the Philippines. In fact, OFW remittances account for 10 percent of the country's gross domestic product.

"Sending and receiving remittances is an important first step toward achieving full financial inclusion. It allows Filipinos and their beneficiaries to transact with remittance and payment channels, familiarizes them with the requirements of these entities, and opens up opportunities to use their payouts for more value-adding financial services like savings and investments," the central bank report said.

Remittances received are often used to spend for household needs such as food, clothing, shelter, education, health, and utilities, among others.

If used productively, remittances can generate greater income, increase the ability to save and invest, and improve the living conditions and welfare of beneficiaries.

BSP said a payment system is a vital part of the economic and financial infrastructure, as it facilitates government, businesses and consumers to transfer funds to one another.

In December 2015, the central bank launched the National Retail Payment System that aims to create a safe and efficient retail payment system in the country. (FREEMAN)