Technobiography

m-Commerce in the Philippines: The way to go

July 26th, 2006 | by ka edong |

I spoke to an American development finance consultant last April - Mark Pickens from The Consultative Group to Assist the Poor (CGAP). In that conversation, I told him that until now, there is still no viable and compelling business model for G-Cash and Smart Money merchants. That is one reason for the slow uptake of G-Cash and Smart Money.

So he asked me what I had in mind as the way to go for G-Cash and Smart Money. 

I shared a handful of ideas. But this was the centerpiece:

a.)   G-Cash is not gaining popularity because there are limited ways to convert cash to G-Cash (cash-in).
b.)   Compare this to the ubiquity of AutoloadMax which you can get in any corner of the Philippines.
c.)    Why not use the AutoloadMax distribution model to increase access to G-Cash? How? I’ll show you how.
 

What is the AutoloadMax model?

An AutoloadMax dealer buys P1,000 worth of load wholesale. He sells it retail in small amounts of P30-P100 or so. After he has received payment of P1,000 in total from all his buyers, he still has a remaining P140 of load. This remainder of load is system generated. The dealer just needs to sell the P140 remaining load to make his mark up of P140 (or 14%).

Globe (and Smart) are able to do this because load is (theoretically) a product that the telcos can produce infinitely (thus all the “unlimited text” promos).

How to use the AutoloadMax model for G-Cash?
a.)   A G-Cash dealer buys P1,000 worth of G-Cash wholesale. He sells the G-Cash retail in small amounts of P30-P100 or so. After he has received payment of P1,000 in total from all his buyers, he still has a remaining P140 of load (not G-Cash). This remainder of load is system generated. The G-Cash dealer just needs to sell the P140 load to make his mark-up of P140 (or 14%).
b.)   Sound familiar? Of course! It’s almost exactly the same model as AutoloadMax. And this time, the product being purchased is G-Cash instead of cellphone load. 

What’s the effect?
a.)   All AutoloadMax dealers in the Philippines will be G-Cash dealers
b.)   If I want to buy G-Cash (cash-in), I walk to the sari-sari store nearby and buy G-Cash (at cost i.e. P100 cash in exchange for P100 G-Cash).
c.)    I can then send this P100 G-Cash to, say, my friend Garpong in Cuyo, Palawan.
d.)   Garpong can go to any AutoloadMax dealer (now also a G-Cash dealer), for example Ronald. Garpong sells the P100 G-Cash to Ronald. Ronald, the AutoloadMax dealer, willingly buys Garpong’s G-Cash. Garpong now has P100 cash. — I have effectively “paid” or “sent” or “remitted” P100 to Garpong.
e.)   Ronald, on the other hand, bought G-Cash at cost. What’s in it for him? He can sell the P100 of G-Cash to another customer. And Ronald will have P14 worth of AutoloadMax cellphone load to sell (generated for him by the Autoloadmax system).

What’s the effect?

• Thousands (as many as 800,000) of G-Cash cash-in and cash-out outlets
• Ubiquity of G-Cash
• Dealers making a (potential)-profit by receiving a system generated 14% load each time the dealer *sells* G-Cash. (The dealer does not make a profit yet by buying G-Cash, he makes a profit when he sells the 14% load generated by the system).
• Velocity of payments is increased a hundred fold! It can take just 2 minutes to send money from Batanes to Tawi-Tawi.
• And when velocity of payment increases, the economy becomes more productive, moving goods and services at a faster pace.

Migs, Nox, Angelo, Markku, Eloy, anybody …. talk to me, tell me you understand. Challenge the ideas, tell me what you think.

ka edong
em-konomist