G-cash is a winner

November 16, 2004

Looks like G-cash is a winner. Unlike Smart’s SmartMoney, there’s no need for the user to change SIMs. The transaction fee (for mobile users) to convert G-cash into cash is relatively small - only 1%. For merchants, the fee is 0%. Globe will sweep your merchant funds into your bank account daily. (This works only for a few banks; BPI is obviously one of those banks, but I understand Union Bank is supported as well).

And Globe has an XML API that allows online merchants to accept G-cash payments by using a virtual SIM. This means that an online merchant won’t need to use a GSM modem to transact with G-cash mobile users. No worries about an employee prying the SIM loose from the GSM modem the transferring your G-cash to another mobile.

Converting one’s prepaid load into G-cash won’t happen right away though; this is because globe merchants buy credits at a 14% discount from Globe. Hence P100 in your prepaid SIM means P86 in Globe’s coffers. There’s also an accounting problem here in that Globe prefers to look at that P86 as ‘profit’. If that P86 is still convertible to G-cash, Globe will have to modify its accounting system to track how much of its ‘profit’ is still convertible to G-cash, and how much of it is real genuine bookable profit.

The converse (converting G-cash into prepaid credits) will happen more quickly though (and very rapidly). If I have G-cash in my SIM, and I needed to buy prepaid credits, all I’d have to do is send G-cash to an Autoload Max vendor, and he can then send me my prepaid load via SMS. But I’ll bet Globe is working on a way to provide this service directly, thus saving Globe 14% in commissions.

Next step will be to integrate G-cash into the ATM network, so users can easily transfer cash from a Megalink or Bancnet bank into G-cash. Once G-cash becomes really popular, you may see Autoload Max merchants selling prepaid credits at far less than their 14% spread. (Eg - a P100 load, that cost an autoload max merchant P86 to purchase, might be sold for only P93).

Some final thoughts

- Globe should introduce the concept of having a “holding period” (say 24 hours) on g-cash transfers before said g-cash can be used. Suppose for instance that someone held you up at gunpoint, demanded your G-cash MPIN, took your mobile, then proceeded to transfer your G-cash to his own mobile account. This money should be frozen until such time that you can inform Globe that you’ve been robbed. Globe should then introduce the concept of “friends & family” so that all g-cash transfers to known “friends and family” won’t be subject to holding periods. This way, people will have more confidence in keeping large amounts of cash in their G-cash accounts.

(clarification: if you’re a merchant, and you receive G-cash, it’s still as good as cash. The fact that it’s been transferred to your account, means that the cash has already been subjected to the appropriate holding period. It just means that you won’t be able to use this cash for another 24 hours, unless you’re a “friend” of your client).

Needless to say, we at DotPH will be implementing G-cash in a big way.