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Peppermint Innovation targets Philippines’ unbanked with digital payments platform bizmoto

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By Filip Karinja - 
Peppermint Innovation ASX PIL Philippines unbanked digital payments platform bizmoto Central Bank
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When it comes to financial services, the Philippines is in the midst of a tectonic shift to digital channels, spurred in part by the pandemic which saw more than half of adult Filipinos shop online for the first time.

At the same time, 70% of the sprawling archipelago nation’s population remain ‘underbanked’, or cannot access traditional financial services providers at all.

Under its digital transformation master plan, the Central Bank of the Philippines (BSP) aims to shift 50% of total retail transactions to electronic channels.

For the ASX-listed Peppermint Innovation (ASX: PIL), filling this banking gap with digital-based offerings is a compelling opportunity.

While the company initially has focused on the Philippines, where its bizmoto digital platform has been gaining traction.

The app-based bizmoto allows individuals to connect and transact, either between themselves (business to business) or direct to consumer.

According to the company, the Philippines had around 27 million digital wallet users in 2020; by 2025 this number is forecast to soar to between 65 million and 76 million.

Endorsed by regulators

Peppermint’s subsidiary, Peppermint Bizmoto Inc. (PBI), had earlier been endorsed as a non-bank electronic money issuer by the Central Bank of the Philippines (BSP) and the country’s Securities and Exchange Commission (SEC).

But last week, Peppermint shares soared 67% after the company received critical certification from the Central Bank of the Philippines (BSP) for membership in the Philippines Payments Management Inc (PPMI).

This enables PBI to be listed among the BSP’s “approved and supervised” operator of payment systems. This will provide a “safe, efficient and reliable” payment and settlement system for bizmoto users.

PBI has also been made eligible for direct membership of Philippines Payments Management Inc (PPMI), enabling access to the PESONet and InstaPay automated clearing houses.

According to the BSP, the value of electronic fund transfers flowing through these clearing houses climbed 30% in the first four months of 2023, to 3.81 trillion pesos (A$100 billion).

‘Important milestone’

Peppermint managing director Chris Kain dubs the BSP certification as an “important milestone” in the company’s strategy to leverage its existing Electronic Money Issuer (EMI) licence and drive revenue growth across the bizmoto platform.

“While we have previously offered PESONet and InstaPay via bizmoto, this has been through a third-party relationship,” he said.

“We will now improve our margins and revenue profile for these types of transaction by having direct membership to the PPMI.”

More broadly, the bizmoto platform focuses on mobile payments, e-commerce, delivery and logistics and mobile financial services.

Lending to the unbanked

The company is rolling out an app-based lending product, Bizmoloan, with an eye to the 52 million Filipinos who do not qualify for a bank loan.

According to the company, the consumer finance market in the Philippines was valued at 1.57 trillion pesos (A$49 billion) in 2018 and is growing at 17% annually.

Even after last week’s share surge, Peppermint is still valued at a modest A$22 million.

“By way of comparison, a Philippines mobile-app based platform with an EMI licence called Coins.ph was sold in early 2021 for US$200 million, after having been purchased by Gojek for around US$95 million in 2019,” Mr Kain says.