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Fintech hits high seas with Philippine e-money app for sailors

Japanese-backed MarCoPay aims to link crews to loans and insurance in $8bn market

MarCoPay grants sailors freedom to spend their money in ways not afforded by cash. (Photo courtesy of MarCoPay)

MANILA/TOKYO -- The Philippines, home to the most merchant ship crew members in the world, has produced a personal finance app that hopes to take the industry by storm.

Fintech startup MarCoPay was founded two years ago in Manila as a 50-50 joint venture between Philippine logistics giant Transnational Diversified Group and Japanese marine transporter Nippon Yusen. Japanese trading house Marubeni purchased a stake in June.

From wage payments in electronic money, MarCoPay will branch out into mortgages and other financial services for sailors who spend months away from home with only a phone to connect them to life on land. For MarCoPay, they represent an $8 billion market.

"We will help crew members connect to the financial, insurance and real estate industries and build assets," MarCoPay President Toshiaki Fujioka said.

MarCoPay began a full rollout of its e-money wage payment service this month, after gaining approval from Philippine authorities. The app lets sailors wire money to families in their home country.

The platform overcomes the problem of spotty telecommunications coverage on the open seas by using batch processing, which saves inputted data in case a connection is lost.

There are 1.5 million sailors on merchant vessels around the world. The Philippines is home to the most, at 220,000, a 15% share.

In the Philippines, sailors typically earn pay that places them in the top 5% of income nationally. Monthly pay for a ship captain is about $8,000. Overall, merchant ship crew members in the Philippines earn an estimated $8 billion a year.

Sailors work on ships for about six months to a year at a time but are typically are paid in cash -- an inefficient combination that has been a long-standing problem in the industry.

Crew members often receive months' worth of wages in lump sums at a port of arrival. Merchant ships worldwide are said to carry more than $700 million in cash at any one time. Ship operators face the costs of wiring the money overseas and must safeguard the copious amount of cash delivered to ports.

The coronavirus pandemic has only added to the need for contactless digital money. In some cases, local health restrictions have meant the ships were refused cash deliveries at ports.

For now, sailors have few options to spend digital money while aboard a ship. MarCoPay next aims to partner with other companies and expand its services. 

By the end of the year, MarCoPay plans to let sailors apply for auto and home loans at preferential interest rates. The app has partnered with leading Philippine lender BDO Unibank as well as insurance provider BPI MS, a Philippine unit of Japan's Mitsui Sumitomo Insurance. MarCoPay plans to collaborate with major credit card companies as well.

These partnerships work both ways. Though sailors are high earners in the Philippines, their long months away from home have made them a difficult customer segment to reach for traditional financial institutions.

Marubeni purchased its stake in MarCoPay with the goal of linking medical, financial and telecom businesses in the Philippines to the app.

Global shipping volume this year is projected to regain pre-pandemic levels seen in 2019, driven by the economic recoveries in the U.S. and China, according to the Japan Maritime Center.

For 2022 and later, "rising growth is against the backdrop of the expanding global population and other factors," said Hiromasa Goto, researcher at the maritime center.

The e-money field holds strong competition in every market worldwide, but MarCoPay says it faces no rival in providing digital money and financial services tailored for sailors. By recirculating money that tends to stay confined to ships, it hopes to give the Philippine economy a shot in the arm.

MarCoPay is preparing to develop other markets as well. Asia is home to some of the biggest sources of seafarers. Within a few years, the company intends to enter India, home to more than 120,000 sailors. It also looks to set up shop in Indonesia, Vietnam and Myanmar, which account for 150,000 crew members combined. The startup says it is exploring partnerships with local businesses in these countries.

Fujioka looks to take MarCoPay beyond the marine transport industry.

"We are considering providing services to Philippine migrant workers in the future," he said. The estimated 10 million Filipino migrant workers worldwide make the Philippines one of the biggest destinations for wired funds.

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