The Benefits of Mobile Commerce

Mobile commerce (m-commerce) is a way of conducting financial transactions without the necessity of going to an office or place of business such as a bank, a payment center, or other financial institutions. For many of us living in urban areas, we could take for granted the fact that we have access to various electronic channels, like we can pay our bills via the Internet, via SMS or through a simple telephone call. It saves us the time that we could better spend doing our jobs or being with our family. The convenience it provides us is something we can enjoy almost on a daily basis. Likewise, banks and financial institutions are plenty enough in urban areas so that in the event the electronic channels aren't available (or we just don't want to use them), we can always pay a visit to these institution's offices.

For some people, however, m-commerce is more than just convenience. It can become a life-changing innovation in their lives. Take for example a farmer who lives some distance away from the nearest business center. For him to make some transactions, like getting a loan, paying bills, or receiving payments for his produce, he would need to make the trek to town that can probably take him away from his business for a full day every time.

Through the m-commerce network, however, the farmer can receive proceeds of loans and payments made to him delivered electronically through an access device, like a cellular phone, in a form commonly referred to as e-money. He can then use the e-money to also electronically make payments for expenses of his business, or he can "cash out" through a nearby cash center and pay his suppliers and creditors who may prefer to be paid in regular cash.

Through all of these, he would probably spend only a fraction of the time and expense he would have to make if he had to go to town for each and every financial transaction he needs to make. He can then devote this saved time and money to producing more and possibly engaging himself in additional profitable business. Likewise, the risk of losing the money by traveling large distances is also minimized. You can only imagine the impact once this process is replicated and compounded.

For the companies and individuals the farmer deals with, they also benefit from receiving his payments faster. They likewise need to have less people manning their offices, or they can channel their personnel to more productive activities as well. Safety also comes into play in these situations, as fewer people need to handle cash and transport them over long distances.

A lot needs to be done for this system to work, though. Legal frameworks need to be set, infrastructures need to be laid, and the target market need to be made aware and capable of using the network. The efforts, however, is worth it once a vibrant m-commerce is set in place.

Electronic Payments in Government

The Department of Trade and Industry (DTI) and the Department of Finance (DOF) of the Philippines issued the Joint Department Administrative Order No. 10-01 last March 24, which provides the guidelines in the use of access devices for the payment of government fees that would not require face-to-face contact with a personnel of the government agency concerned. This would include payments made via the internet and mobile devices like cellular phones. Modes of payment include credit cards, debit cards, and electronic money.

Most of the payments made to the Philippine government are still done manually, meaning you have to queue to a cashier at the agency's office. One of the exception would be the Electronic Tax Filing System of the Bureau of the Internal Revenue, wherein corporations can make their payments via their BIR-accredited bank.

Utilizing technology for government payments can provide the benefits of speed and security. However, the challenge would be the setting up of the necessary infrastructure to support such a payment system, as well as educating the public enough on the benefits of using the system. It's still unclear to me at this point who is the target market for this project. But I am guessing that this would primarily be for the corporations and other businesses. That is plausible and practical since they would probably be dealing with the government quite often in the normal course of their businesses. That may probably be the reason why the guidelines were issued by DTI and DOF, which deals with both trade and finances. Hopefully this initiative will be a step forward in the development of payment systems in the Philippines.

How The World's Poor Live on $2 A Day

My job often takes me into some unexpected mental excursions. I was reviewing a document when I took notice of a reference in the Annex pertaining to a book entitled "Portfolios of the Poor: How the World's Poor Live on $2 a Day". My online search got me to their webpage, which you can reach by clicking on the pic at the left.

The book is the product of a year's worth of on-the-ground research on the world's poorest, which is defined as households living on $2 a day or less. The research provided some surprising insights into the financial lives of the poorest. Although I wasn't able to read the book (it wasn't available locally), I was able to read the 4-page summary that you can get when you click on the Link tab in the site, along with some other summaries and a free look at the book's first chapter. It was already an enlightening account by itself. For example, it was noted that while middle class households would normally decide which loans to take based on the interest rate, the poor is much more concerned with the flexibility of the payment terms and the availability of credit even if it means higher interest rates. Quite practical if you think about it, but these insights are often overlooked since the focus of most financial planning is on getting the cheapest credit possible.

You can also get more insight by reading the three household profiles found on the main page. Do visit the site and get a fresh viewpoint of the financial lives of poor people. It will definitely impact the way you look at them again.

Financial inclusion is a topic that deals with the provision of basic financial services to the poor. It is closely related to the activities of microfinance, as well as the concept of providing financial access to the "unbanked". The provision of financial services to this segment of the population is also facilitated by the use of e-money, which I have been discussing a bit already. I will be providing more information on these subjects in my future posts.