The Future of Payments in the Philippines ft. Alvin Wong (Maya) Ep. 2

The Philippines receives $40 billion in remittances every year, money that still passes through five or six intermediaries before it reaches a family. Eric Cheung talks to Alvin Wong, Head of Crypto Business at Maya, one of the few institutions in the country holding all major financial licenses, about how stablecoins are letting Maya settle that money instantly instead of routing it through a chain of correspondent banks. They dig into why cutting fees never solved the real friction, how Maya plans to make blockchain invisible to everyday users and merchants, and what it'll take for remittances to stop being a "product" and just feel like sending money. 

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Eric 0:14

Hi, welcome to Settle In, where we're going inside the infrastructure shaping the future of payments, because the the future of payments doesn't wait. I'm your host, Eric Sheng. Today, we are looking into the Philippines, specifically what it takes to actually fix a $40 billion wins market. To help us break this down, I'm joined by Alvin Wong, head of crypto business at Maya, one of the region's most successful banks. Alvin, welcome to the show.

Alvin 0:40

Thanks so much for having me, Eric. You know, great to be on the show. Thank you.

Eric 0:45

Yeah, so you know, Alvin, so so let's dive right in, right? So for the for listeners that are outside of the Philippines, they might not realize Maya holds what many may call the holy grail of like financial stacks. I mean, you guys are a licensed digital bank and electronic money issuer, and a payment processor and a virtual asset service provider, uh short-term, all in one roof. So, like why does like what does these like four licenses matter? And and what does like Maya actually do that a company with only maybe like one or two pieces like couldn't?

Alvin 1:23

I think for most people who may not have of Maya before, uh globally, I think Maya is kind of like a financial ecosystem rather than a single product. Uh most people know us as either a digital wallet or digital bank, but uh behind it, we've actually built almost every layer of the payment stack. Uh we operate one of the country's largest payment acquiring businesses, for one. We have a digital bank. We are also an electronic money issuer, as well as a virtual asset service provider. I think why that matters is because we don't just move money, but we receive it, we safeguard it and convert it. At times we settle it and uh make it usable across different financial products. Uh and you know, each part of the license solves a different piece of the puzzle. So, for example, uh payment processing license helps merchants accept payments. Uh, an EMI or e-money issuing license allows customers to hold and move electronic money. Uh digital bank lets customers save, borrow, and build their wealth. Uh virtual asset service provider or VASP for short allows regulated interaction with digital assets like stable coins. But uh individually, they're very useful. But uh I think our viewpoint is that together they're transformative because instead of handing customers off between multiple companies, we can orchestrate all of this journey ourselves, and someone can receive funds, convert currencies, pay a merchant, save the remaining balance, and even invest all within one regulated ecosystem. And that's very difficult to replicate if each of those pieces belong to a different institution.

Eric 3:17

Yeah, that's incredible. I think um, I mean, for myself, I came from the traditional payment space, especially uh during the Vinted era. And um and what we see back then is that um a lot of these companies may hold like one or two parts of the licensees or the services, and they are integrating with like third parties in order to have that full stack. And what happens back then is that there are a lot of frictions involved, especially um when we talk about the like the compliance of the different companies. Say, for example, if I am sending money from Hong Kong through a company A, they might be using company B, C and D. And all companies may have like differences in their in their compliance in the KYC and whatnot. And what may work with uh with the company that I work with may not work with as some of the lower stack, and that's where the friction comes in. And I and I guess this is like it's an incredible like uh regulatory stack that you guys have. But um let us like connect this to a real-world problem you're solving. Like as mentioning earlier, um 40 billion dollars flows in the Philippines every single year in remittances. And behind that number, there are like real family that are waiting for school fees and medical expenses. So if we walk through the human side of this, like what does a transfer actually look like for an overseas like migrant worker trying to send money home today? Like, and where does the system break, in your opinion?

Alvin 4:44

I think people often think of sending money or remittances cross-border very simply as sending one uh money to another, but in between them, there's actually a chain of different intermediaries. Uh so for example, an overseas worker uh working in in Hong Kong, for example, would uh earn money abroad and they typically visit a remittance provider or use an app. Uh, what happens is that that provider works across different corresponding banks, payment networks, liquidity providers, or foreign exchange partners before eventually reaching a local institution, for example, in the Philippines, that can finally credit the recipient. Only then can the recipient withdraw cash or spend it digitally. But every note of the way, every handoff introduces costs. There's delay, there's reconciliation, and there is operational complexity within that chain itself. So to the customer, it feels like one transaction, but actually, what happens behind the scenes is that it might involve typically five or six different organizations uh you know to enable that to happen as well.

Eric 5:55

And and I think this is a classic saying in the payment space whereby like we make money by friction. And and I guess with everything mine has built, like this is something that um you guys have potentially solved. But if we just break things down, like what is one part of the Roman's journey that genuinely frustrates you today?

Alvin 6:18

I think the experience is still built behind infrastructure, which we mentioned and walked through before just now, rather than people. Um but in essence, families don't really care how many payment reels exist. They care whether the school fees can be paid today. They care whether the hospital accepts the payment, they care whether when the rent is due before the transfer arrives, you know, these are some of the mainstream problems that everybody feels and experiences. We've become very good at moving money, but uh we're still not consistently good at making money immediately useful. I think that's the gap we still need to solve for, uh, and that's what we're working on as well.

Eric 7:01

And I guess like with the whole regulatory stack that Maya consists of at this moment, and there is it is exactly what you guys are trying to solve, and I think I think we can probably see that in the near future, right? That's correct, yeah. Yeah, then I guess like the the the next question would be something like I think I think like back in the whole like payment fintech days, uh, there's always we're always always always talk talking about fees. Like the default answer to every single problem has always been lower the costs. Uh but that never really solved the um the underlying um friction that we do see in the um in the payments flow. So what what do you what do you think that like everybody misses by like just looking at fees as the full story, but not not the entire problem.

Alvin 7:51

I think in our industry, a long time everybody competed on who could charge the lowest fee. And and don't get me wrong, actually uh charging lower fees absolutely help uh from the sending side uh you know out to to the receiving side. But lowering a fee doesn't actually remove the friction because customers still experience settlement delays, you have uh uncertainty on foreign exchange, there are different pickup methods, whether to to the wallet or you know, of a center itself, the limited operating hours, also poor visibility into where the money actually was. I think the real problem wasn't simply the cost of moving money, it was basically the complexity of moving money. And that's a very different problem to solve for as well.

Eric 8:42

You point out a very interesting point about like tracing the money flow, because traditionally, when we make a cross-border remittances uh from a bank, for example, they will go through Swift. Um, of course, they'll probably go through AC for clearance and whatnot. Um, but like what happens is like if there is a um holdup in between, it's it has always been very difficult for me to like find out where it's being stuck and why it's being stuck. And I think traditionally for most banks and fintech companies, um, they will use this thing called a tracer. And what it is, is just a messenger, a a message that is sent through the um through through the Swift network to find out where being what's being stuck, but it doesn't really solve the problem. At the end of the day, you're still waiting for that money to be clear, and there's a huge uncertainty on that. Um with Maya, would that would that be something that you guys can potentially solve um for for for the users?

Alvin 9:42

I think uh there's some recent new technology that we are also involved in in terms of uh you know sending money through crypto rails. I think through the you know the Swift network itself, it's also about uh hops through multiple correspondent banks, and each time it could be a different hop when you pass that payload onto someone. There's also that question about costs as well. So I think there are multiple channels today that everybody uses. Uh, but I think at least some of the channels that we participate in, for example, uh moving uh value across uh crypto rails is something that we've been involved in, either uh you know, working to facilitate uh consumers uh to enable that, or working with businesses who want to actually uh settle on a cross-border perspective to us uh and pass to us as a VASP in order to uh convert that to pesos and disperse on behalf of them. So I think we see kind of a lot of different rails and a lot of disruption through the traditional. But I would say I think where we see it scaling right now is moving those corridors onto stable coins. Uh, because unlike settlement where you actually depend on different hops, when you actually send via crypto, the value itself actually arrives immediately. Uh obviously it goes through uh you know KYT, know your you know, know your transaction and being able to scan where that comes from and being able to profile who is the selling party, uh information that is required from a regulatory point of view uh from a licensed provider such as Maya. Uh but I think we will see more and more of this uh happening, whereby the world is kind of uh shifting those to a new channel for instantaneous real-time value transfer.

unknown 11:36

Yeah.

Eric 11:36

Yeah, absolutely. And and that brings us to like my my next question, right? Um I think I think in the Philippines we're seeing one of the highest adoption of like crypto rates in Asia, uh, which is incredible compared to the uh when we look at how many jurisdictions are there in India in the region. I mean, people are obviously very comfortable with digital assets, but yet um we don't we don't see the average family um translate that into a better remittance experience. Um, is there a reason why the technology has not closed that gap yet? Like in your opinion.

Alvin 12:10

I think in my opinion, technology itself doesn't create a better customer experience. Um the reason why I allude to that is because most customers don't want to manage wallets. Um they don't really want to worry about private keys, uh, and they don't want to think about like blockchain networks. Certainly they don't want exchange rate volatility while sending money home, because that's also you know weighing in the back of their mind. Uh but the industry has become very good at proving blockchain works, and uh this is you know spending less time to remove complexity for ordinary families. Uh but I think I feel that the technology should disappear into the background, and that's when consumers actually benefit. Because I think the focus is more about moving money and the benefit of that, you know, rather than focusing on uh worrying about the technology underneath.

Eric 13:04

Yep, absolutely, man. I think we're we come to the point where the um I think blockchain industry in general um are more focused on a more seamless experience. I think like back in a couple years when we talk about like stablecoin payments or just blocking in general, there are so many different blockers to for a general um general somebody who doesn't know the industry to get into. So, like you said, um there are exchanges, there are wallets, private keys, and there are um like bridging involved and whatnot, which gets very complicated. And we do see a lot of people make mistakes when they were trying out the technology, and that kind of just scares them away, which is unfortunate. And I think this is exactly why the partnership with between my and Lydian is supposed to solve, right? And um, so in simple terms, like how does this partnership bridge that gap and um and what actually changes uh for the experience uh of payments on the receiving end?

Alvin 14:02

I think for us we look at stable coins, um, which is gaining a lot of traction, whether you look in the press, PR, companies who are being involved, large institutions who are now being involved in it, we look at it very differently. Um, not as something that customers need to hold, but as uh the benefit of being a settlement rail. Imagine someone overseas sending value using stable coins, that transaction moves quickly across blockchain infrastructure. Uh so for example, on the Philippine side, Maya as a VASP uh settles directly into pesos uh with the underlying uh partner uh on our side. For example, it could be a merchant, so in this case, it could be a merchant. The recipient doesn't need a crypto wallet because uh we would obfuscate that complexity on behalf of them. They don't actually need to understand blockchain. Uh what they simply receive is Filipino pesos inside a regulated financial institution, which they already trust and have uh business operations today with because Maya is also an acquirer for them. Uh and the blockchain then becomes invisible and experience becomes familiar because it just sits alongside all the payment options that they have today, which they're already accepting payments. So I think our job is to make payments kind of invisible. Uh, and you know, the the the merchant itself doesn't need to worry about that. They still receive the same pesos, uh, which is the exact same experience that they have today. So we are pretty excited. Uh, of course, it's fairly new. Uh we're one of the largest uh merchant acquirers in in the country itself. Uh so we do have scale, but obviously we also need to start small and work with uh key merchants who are early pioneers who want to join us uh to be able to accept that as well.

Eric 15:58

And uh and if you don't mind me asking, right, would do you have some kind of sneak peek on some of the pilot, let's say merchants that are that are getting into this with Maya?

Alvin 16:09

Uh I think we're just starting off. Uh I think I think our hypothesis is that the ones where there are more uh overseas visitors, footfall, uh convenience services would be kind of where we will want to start off with. Um I think by nature of the fact that, for example, you could be a tourist that comes into the Philippines and you might not want to change into pesos, uh, but you actually hold stable coins, you know, with whichever wallet that you use. And the benefit for that user when they arrive is that they don't need to actually go to a money changer to change into pesos, but they're able to spend immediately. And there's a big difference between uh when you're faced with a payment scenario where I'm like, oh, okay, I didn't bring anything, I didn't bring the coins, but what else can I pay with? I think that scenario is where we immediately want to target uh by offering this. Uh OFWs who are overseas who want to actually uh pay for services but may not have pesos, uh also one of those uh captive segments that we are looking at as well.

Eric 17:15

And would you say that this is a natural evolution for crypto payments? Because I think previously, um, in order to do to do something similar, uh, they'll be using, let's say, a USDT or crypto stable back um credit card on Visa Master, which works for for most part, but it's incredibly expensive. And uh and what we're seeing in the region is that a lot of countries are starting to look into this um, I think QR code payments or just a being able to pay directly from the wallet. So do you do you do you do you believe this is the uh the natural direction that uh stablecoin payments uh should be taking or will be taking moving forward?

Alvin 17:56

I think there is uh one part of it is the regulatory part of it in terms of how do you know a foreign wallet, what is the you know, KYC or KYT of the transaction, uh which is why I will speak specifically on stables, because uh every transaction that you send to us, we actually need to uh present also the travel rule for you to fill in the information. So under the guidelines of uh BSP on the central bank itself, uh we need to collect such information uh before we are able to process that and uh be able to uh you know scan your transaction and complete that transaction. So that's something which of course uh introduces a couple more steps for the end user wherever they may come from. But the net result is that you won't be stuck in a payment scenario where you can't pay. You have a you know, obviously, you know, there's cash, there is you know, car, there's QR wallets, you can pay with your own stable coins. I think where we want to want to do is offer a plethora of options for merchants to be able to accept payments so that you'll be able to accept any such uh payment scenario.

Eric 19:04

Got it. I mean, that's obviously very exciting. And um, I think this this will be incredibly useful for somebody like myself who travels a lot because I I don't want I don't want to hold so many different currencies. I I have a whole stash of like I think just spare change from every single country I go to. So if I'm able to just universally spend my stable coins in like in multiple countries, then that I think that'll be very convenient, and um, and that'll just improve the experience by a lot. And I guess like if we crack down the the main like friction point of like the stack, um correct my correct me wrong, so I believe that the major friction points that we look we we were seeing here is probably like volatility, uh custody, and regulatory uh comp complexity. So if we if we if we take look take a look at like one at a time, so starting with uh volatility, how does your model guarantee the value sent, exactly the value received?

Alvin 20:02

I think volatility is something on top of any overseas worker who actually sends money for school fees. Uh, you know, granted, I think the best isn't doing that well recently, so that's also a reality. But let's say just think, for example, if Bitcoin drops 8% before the family converts it. That isn't an investment. That's like a household budget being disrupted. Uh I think where we center on behind using stable coins is stable coins removing most of that pricing uncertainty. Uh and even more importantly, when recipients receive the pesos almost immediately, uh they aren't exposed to digital asset price movements. Uh I think the objective isn't to give families crypto exposure, it's to give them payment certainty. Now, on the topic on custody itself, for those who may or may not know, custody basically is as simple as who is responsible for safeguarding your digital asset. So if individuals manage your own wallet, you become responsible for security, your backups, and recovery of your keys. That's a big responsibility for a lot of people. Uh most people don't actually want to become their own bank, they just want reliability when it comes to payments, right? Um, regulated institutions like us already know how to protect customer assets. We comply with the regulations as well, and also we provide uh customer support. Uh so you may not necessarily have that when it comes to your own self-custodial wallets. So I think for mainstream adoption, simplicity and reliability sometimes often becomes the better experience. But obviously, as with today, we see that there's a choice for many people. Uh the third topic that you mentioned was more on the topic on regulation, right? And I think technology usually moves faster than regulation. But the reality is that. That financial infrastructure only scales when you have the regulators, you have the banks, payment providers, all trusting the model. I think the fact that we have uh great regulators in uh BSP, which is very encouraging uh for us, willing to engage with uh innovation while remaining very focused on consumer protection, which is an important topic in the Philippines as well. And that's exactly the balance that you want because innovation without trust doesn't scale. But trust without innovation doesn't actually move the industry forward as well.

Eric 22:37

Yeah, absolutely. And I think like, but in your in your like opinion, right, out of that three friction that uh we identified, like which one do you think that is the uh probably the hardest to solve? Like, do you do you think is um like volatility, custody, or regulation in general, or just all three?

Alvin 22:57

I've spoken to a lot of uh visitors, foreign visitors, or uh you know, uh colleagues who are working and representing different institutions uh globally, right? I think it's being recognized that we have a well-regulated environment in the Philippines, and I think the BSP deserves a lot of credit for it. Uh why we say that is because they've created an environment where innovation can be explored responsibly. And that's not really that easy. You look across the likes of uh neighboring countries, not everybody uh is there uh as quickly or has uh clear guidelines. Uh of course we do see that a lot of the neighboring jurisdictions are also uh you know improving and coming up with laws and clear guidance, so that's very encouraging as well. Uh but coming back to the Philippines, that you know it's not that everything is easy, but there's still significant work around compliance, risk management, uh operational resilience. But I think how it helps with BSP is that having an open dialogue with them allows institutions like Maya to experiment with clear guardrails instead of uh avoiding innovation altogether. So I think that's super important, you know, for companies to build, to be able to try new things and pilot new things uh in regular dialogue and open dialogue as well.

Eric 24:22

Got it. And I guess like for the benefit of let's say uh companies wanting to conduct business in the Philippines, um, can you elaborate a little bit more about the kind of dialogue that uh Maya has with the BSP and the regulators and just to make sure that they're comfortable with um the business model that's been presented? So, what are you what are you like what are your suggestions when an oversee company wants to um start their business in Philippines and just make sure that it's sustainable and it's something that is welcome?

Alvin 24:56

I think the nature of the Filipino market is that perhaps people kind of assume that emerging markets like Philippines, that we simply need cheaper financial services. Uh, but actually, Filipino consumers are pretty sophisticated. Uh you know, they expect world-class experiences. They're highly digital, very, very comfortable with uh mobile technology and incredibly fast at adapting products that genuinely improve your daily life. So if you're only building a cheaper version of yesterday's solution, I think you're already behind. So the right way of thinking is really to focus on the leading edge, very mobile-ready population, uh a lot of uh incumbents in place, uh, people, you know, and institutions like like Maya already providing world-class solutions to them and scaling, right? So I think there's still a lot of room to grow within the Philippines itself. And I think that is really quite a differentiating factor across uh you know other uh countries in uh Asia Pacific as well.

Eric 26:04

And this is exactly why I think when you go into a new market, it's always important to work with a company like Maya who knows how to navigate um the regulatory environments and actually the the need of the um I think of the general users. I think a lot of companies fall into the trap of just going in with the same product just by maybe marginally cheaper or marginally faster with a better looking UI, like honestly. And um and and you rightly point that that's probably not the best way to do it, and is an appreciation the fact that you're so like uh candid about like ha ha has has been done. Then I guess like just looking ahead, right? Um once this infrastructure is fully built and scaling, um, what is the final vision of Maya? So how how was sending money feel like for family um once everything is like smooth and then you have the the product that you guys are like are dreaming of right now?

Alvin 27:00

I think I feel that ideally nobody talks about remittances anymore. In in rather it should simply feel as simple as uh sending money, just like someone overseas sends value, and seconds later their family has pesos available to spend, save, invest, or pay your bills, right? No need to worry about exchange rates or wondering where the transfer is. Uh, you don't need to understand like blockchain, you don't need to stand in line to queue up. But the technology just disappears like that, and the financial outcome becomes effortless. I think that's when infrastructure and the part that we play in working on this to enable this has done its job.

Eric 27:44

And would you say we're finally at the junction where this can finally be a reality? Because like before, because I think um the whole payment um ecosystem um in some way wasn't advanced enough uh for that for that vision to become a reality. Like, do you think that right now uh we are finally at the stage where this is possible?

Alvin 28:08

I think as a global industry, when we talk about the topic of Philippines to outside uh, you know, to various people as well who may not be that familiar, I think typically they look through the lens of financial inclusion alone. Uh I mean that's important, but I think it's no longer sufficient because I think Philippines is kind of becoming a proving ground for modern financial infrastructure. The question isn't whether the emerging market can adopt advanced payment technologies, but maybe they're really doing it. I think the real question is whether the rest of the world is prepared to rethink how payment should work in the first place. And we have a lot of uh uh you know large entities who are providing those services uh and really working along the forefront of scaling and becoming part of daily life. At the end of the day, I think uh while there are many channels and alternatives and ways that people can transact, pay, and send value, it's also about how it actually solves your key problem and become part of your daily life that becomes really useful, seamless, and invisible. I think when we reach there, I think we will be successful. Uh, of course, today there are many ways to do something very similar, and we offer all of those options. Uh, but I truly feel that at the end of the day, that is really the ethos of what we'll be trying to create in terms of financial technology. Uh, whether it be it through you know blockchain, web two, web three, uh, it really needs to feel very seamless and easily understood that you don't need to worry about the underlying technology.

Eric 29:41

Yep, and that's definitely very exciting. And like we said earlier, like Maya has all the moving parts that is needed for this to be to work. And I think I think not just like Morph, I think everybody who to all the listeners, we're probably all very excited to see like how how it's gonna how's it coming to fruition. And I guess I just in the in the essence of time, just to wrap up, um, what is what is one thing you wish um global payments industry to stop getting wrong about markets like the Philippines? I know you did cover it briefly in the early answers. Um so are you able to elaborate a little bit like on this part?

Alvin 30:18

I think what would be interesting for the rest of the global market is that they are well-regulated entities. At least you know, you you mentioned about the topic of licensing. Uh I think it's rare that typically institutions hold uh EMI license, digital bank license, VASP license, you know, one of the largest acquirers. So I think we are very open to be connected to all the overseas companies who believe in regulation, believe in compliance, and want to work with a partner or institution like Maya, who you know is very well regulated and will work together with them closely to ensure the transfer of value is seamless, cross-border. So we're happy to connect with all the parties outside uh who want to reach out and uh connect with us. Uh, but we believe that we serve as the on-and-off ramp partner for any form of stablecoin infrastructure on the cross-border side. So that's one entry point. Uh, we also welcome visitors across the world coming in to experience uh you know stablecoin payment acceptance uh when we launch it. Uh so Kievi, that will be that's what we are working on. Uh but it's also kind of a way to uh address merchants and merchant categories because for the longest time, when you talk about payment acceptance using stable coins, it's maybe you know luxury cars and designer fancy watches. But I think we are working on more of the meat and potatoes merchants, those that are merchants around you, where you actually spend your daily life, uh, whether it's uh you know F and B, convenience, uhbeit. I think the strategies to start off where we believe there will be strong uh you know foreigner demand. Uh but I think gradually we intend to go after all the uh merchants uh where we have less than one million merchants today uh in the whole Philippines to actually enable that. So it's a lesson in learning and scaling and growing, but we do we already have the merchant base, so it's more about execution. And uh so that's uh super exciting. Happy to invite you know the rest of the world to come in and uh check it out, ask questions. Um there's no wrong and right answer because we're just starting from scratch, but for sure we want to scale, we want to grow, we want to learn from the experiences, the feedback and customer feedback, and reiterate and improve as well.

Eric 32:43

Yeah, I love that, man. So for for all you listeners here, if you guys want to conduct business about payments on our FRAM and merchant acceptance, like do reach out to Maya. Uh, they are the expert in the Philippines market and and a very trusted partner. So, Elvin, yeah, thank thank you so much for being so candid about what it actually takes to bridge the gap between traditional finance and web3. And it's clear the tech is ready and it's a matter of um of execution, and Maya is obviously proving that it can be done. Yeah, so thank you, thank you so much for thank you so much for your time, man.

Alvin 33:17

Thanks so much for having me, Eric. Uh, you know, great to share with uh with you as well as the uh listeners about this. Um, you know, please reach out and you know, happy to connect uh via LinkedIn. Just look for Elvin Wong uh Maya. Probably you you see me online. That's probably the easiest way to look for me.

Eric 33:34

Yeah, yep. And to our listeners, uh thank you for settling in with us because the future payment doesn't wait. We'll see you next time.