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The Potential for Remittances to Drive Financial Inclusion in the Philippines

19 Jul 2023

The Philippines is a developing country with a population of over 100 million people, with a significant portion living below the poverty line. However, the country has a large migrant population, believed to be around 10 million people, who work abroad and send money to Philippines to their families. These remittances, which accounted for approximately 9.3% of the country's GDP in 2020, have played a critical role in providing financial assistance to families and communities across the country.

Remittances may also promote financial inclusion in the Philippines, which is essential for attaining long-term economic expansion and eradicating poverty. This blog explores how remittances promote financial inclusion in the Philippines, highlighting the state of the financial services sector there as well as the possibilities and problems posed by remittances.

What is Financial Inclusion?

Financial inclusion ensures that individuals and businesses have access to a broad range of affordable and appropriate financial products and services. These may include, among other things, savings accounts, credit, insurance, and payment methods. 

Financial inclusion aims to promote economic development, reduce poverty, and improve the financial well-being of individuals who have historically been excluded from formal financial systems. 

This encompasses low-income people, women, youth, rural communities, and other marginalized groups. Financial inclusion is a crucial driver of sustainable development and a critical component of efforts to accomplish the United Nations' Sustainable Development Goals.

How Remittances Can Drive Financial Inclusion in the Philippines

Increased Access to Formal Financial Services

Remittances provide a chance to expand access to formal financial services in the Philippines. Many remittance recipients need bank accounts or other traditional banking services. However, remittance companies such as ACE Money Transfer and MoneyGram have partnerships with banks and other financial organizations in the Philippines, allowing remittance recipients to establish bank accounts and access other financial services. This can increase financial inclusion by giving more Filipinos access to formal financial services.

Encouraging Saving and Investment

Remittances have the potential to promote business and saving, which could advance financial inclusion in the Philippines. Many people who receive remittances use the funds to cover everyday costs like housing and food. However, remittance recipients can save and invest their money with better access to formal banking services. This can create financial stability and open the door to financial equality.

These goals can be achieved by offering economical and secure services for every money transfer to Philippines from overseas. ACE Money Transfer tops the chart in ensuring such trusted services, which millions of expatriates use to transfer funds back home.

Driving Innovation in Financial Services

The Philippines has a thriving fintech sector, and remittances can drive financial service innovation. Fintech firms can use remittance data to create new products and services that suit the needs of remittance recipients. Fintech firms, for example, can use remittance data to offer credit to remittance recipients who may need a formal credit history. This can promote financial inclusion by providing credit to individuals otherwise excluded from the traditional credit market.

Building Financial Literacy

Financial knowledge can be increased in the Philippines with the aid of remittances. Many remittance recipients may need to learn how to use official financial services because they are unfamiliar. By offering knowledge and instruction about financial assistance, remittance providers can contribute to developing financial literacy. This can promote financial inclusion and spur the use of official financial services.

Mobile Banking

Mobile banking can be a powerful tool for promoting financial inclusion in the nation, given the extensive use of mobile phones there. Remittance service providers can collaborate with regional banks and mobile network carriers to provide mobile banking services like bill payment, account management, and mobile money transfers.

Electronic Payments 

Remittance companies can collaborate with local businesses to encourage electronic payments. People can escape the expenses and risks of carrying cash by promoting electronic payments. The danger of fraud can be decreased, and financial transparency can be increased.

Microfinance Initiatives

Remittance companies can aid microfinance programs that give people who might not have access to conventional banking the chance to access credit and other financial services. These programs can assist people and small businesses in establishing credit histories and enhancing their financial status.

Challenges to Remittances Driving Financial Inclusion in the Philippines

High Fees

The high fees associated with remittance services are one of the obstacles to remittances driving financial inclusion in the Philippines. Fees are charged by remittance providers, which can be a significant barrier for low-income households. High prices can limit how much money remittance recipients receive, reducing the potential for remittances to promote financial inclusion.

Do you know how overseas Filipino workers (OFWs) get rid of hidden charges and high transfer costs when transferring funds back home? They choose the option of an economical online money transfer to Philippines via ACE’s remittance solutions since they get competitive exchange rates and low transfer fees.

Limited Access to Formal Financial Services

Many Filipinos still need access to formal financial services, even though remittances can improve access to these services. Many people rely on informal financial services, especially those underserved in rural areas and low-income households. Access to legal financial services may ensure remittances' ability to promote financial inclusion.

Lack of financial literacy Remittances' role in promoting financial equality in the Philippines is seriously challenged. The ability to successfully manage financial resources is referred to as financial literacy. It includes all aspects of budgeting, saving, investing, and debt control. 

It also includes awareness of financial products and services. Low financial literacy can cause individuals to make poor financial decisions, restricting their access to formal financial services and lowering their financial resilience. 

Many Filipinos must improve their financial literacy, especially in rural regions and low-income households. This may reduce remittances' ability to promote financial equality.

Addressing the Challenge of Financial Literacy

To address the challenge of financial literacy, a multi-pronged approach is needed. Here are some potential solutions:


Financial education is vital for developing financial literacy. Education can be given by schools, community groups, and financial institutions. Education should be tailored to the specific requirements of the intended audience, including language, cultural context, and literacy levels.

Simplifying Financial Services

Financial services can be intricate and challenging to understand. Simplifying financial assistance can be made more approachable for those with little financial knowledge. Plain English communication, user-friendly interfaces, and streamlined product design can help.

Digital Financial Services

Access to financial services and financial knowledge can both be improved by digital financial services. Mobile phones, commonly used in the Philippines, can access digital financial services like mobile banking and e-wallets. User-friendly digital financial services have the potential to improve financial knowledge.

Financial Coaching

Individualized financial coaching can help individuals with low financial literacy. Financial coaches can assist individuals in creating a budget, setting financial objectives, and managing debt. Community groups or financial institutions can provide financial coaching.

Overall, addressing the issue of financial literacy is crucial to promoting financial inclusion and assisting people in improving their economic circumstances. A multifaceted strategy that leverages education, technology, and institutional support is required to guarantee that everyone has the knowledge and skills necessary to make informed financial decisions.

Impact of ACE Money Transfer to promote remittance in the Philippines

ACE Money Transfer has the potential to have a significant effect on promoting remittances and driving financial inclusion in the Philippines. ACE Money Transfer can assist you in the following ways:

Low Transfer Fees

ACE Money Transfer offers low-cost money transfers to the Philippines. From 28 corridors, Filipinos can send money to the Philippines without paying any hidden costs or extra charges that they typically have to face while using unreliable platforms. ACE Money Transfer is offering this so Filipinos can rely on legal mediums. Another reason for this is lower transfer fees than conventional banks, which make it easier and more affordable for Filipinos to send and receive money. This is particularly beneficial for those who rely on remittances as their primary source of income.


Mobile App

ACE Money Transfer's mobile app allows Filipinos to simply and quickly access their services from their smartphones. This is particularly important for those who do not have access to traditional banking services.

Collaboration with local banks

ACE Money Transfer can collaborate with local banks to provide more choices for receiving and withdrawing funds. This can assist people in remote areas who may not have simple access to banks.

Financial Literacy 

ACE Money Transfer can also encourage financial literacy by providing educational materials and resources to their customers. This can assist individuals in better understanding how to manage their finances, use financial goods and services, and improve their financial standing.


Remittances can drive financial inclusion in the Philippines. The nation has many overseas Filipino workers who send money to Philippines online regularly. Remittances can be used to improve access to financial services for unbanked and underserved groups with the appropriate policies and programs. Mobile banking, electronic payments, and microfinance projects are some of the ways remittances can be used to promote financial inclusion. However, issues such as high fees and a lack of financial literacy must be tackled. Overall, remittances can be a potent tool for promoting financial inclusion and improving the economic well-being of Filipinos.


Q: What are remittances, and how do they relate to financial inclusion in the Philippines?

Remittances refer to money sent by overseas Filipino workers (OFWs) to their families in the Philippines. They play a significant role in driving financial inclusion by providing recipients with access to formal financial services, such as bank accounts, savings, and loans, which can improve their economic well-being.

Q: How do remittances contribute to the growth of the financial sector in the Philippines?

Remittances contribute to the growth of the financial sector in multiple ways. Firstly, they increase the deposits held by banks, allowing them to expand their lending activities and stimulate economic growth. Secondly, remittances encourage the development of financial infrastructure, including banks and remittance service providers, which expands access to financial services for both recipients and the broader population.

Q: Are there any specific initiatives or programs in place to harness the potential of remittances for financial inclusion in the Philippines?

Yes, the Philippine government and various stakeholders have implemented initiatives to harness the potential of remittances for financial inclusion. One example is the National Strategy for Financial Inclusion, which aims to improve financial literacy, expand access to financial services, and promote the use of digital financial solutions. Additionally, partnerships between banks, remittance providers, and fintech companies have facilitated the development of innovative products and services tailored to the needs of remittance recipients.

Q: How can remittances help address the issue of financial exclusion among marginalized groups in the Philippines?

Remittances can play a vital role in addressing financial exclusion among marginalized groups in the Philippines. By providing recipients with access to formal financial services, remittances empower individuals to save, invest, and build a financial cushion for the future. This can help break the cycle of poverty, enhance livelihood opportunities, and promote economic stability, particularly among those who previously had limited or no access to financial services.


Q: What are the potential challenges or risks associated with leveraging remittances for financial inclusion in the Philippines?

While remittances have the potential to drive financial inclusion, certain challenges and risks need to be addressed. Some key challenges include the high cost of remittance transfers, limited financial literacy among recipients, and the need for improved regulatory frameworks to ensure consumer protection. Furthermore, technological barriers, such as limited internet connectivity in rural areas, can hinder the adoption of digital financial services, which are essential for inclusive financial access. Overcoming these challenges requires collaborative efforts between the government, financial institutions, and other stakeholders to create an enabling environment for inclusive financial services.


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