MarCoPay: Making money transfers smooth sailing

By Jobo E. Hernandez and
Carmina Angelica V. Olano, Researcher

USUALLY, seafarers would have to wait for their ship to dock and go to a bank or a remittance center when they want to send money to their loved ones. With money transfers being made easier thanks to money transfer apps, the same convenience will be extended to seafarers that would enable them to make transactions anywhere in the world, even while at sea.

Japanese shipping firm Nippon Yusen Kaisha (NYK), along with local business group Transnational Diversified Group (TDG), looks to tap this market of over 200,000 Filipino seafarers through a QR (Quick Response) code-based app. This app, dubbed MarCoPay (Maritime Community Pay), system development started 2nd quarter of 2019 and as of this printing is in trial stages with 3 test vessels. In December, MarCoPay, Inc. was granted a license from the Bangko Sentral ng Pilipinas to operate as an e-money issuer (EMI).

To successfully execute a digital platform and highly secured payment system, MarCoPay tapped the expertise of Accenture to develop its system and Citibank as its reserved bank.

The MarCoPay app services will be available to all shipping companies and seafarers of any nationality starting May 1.

With this in mind, BusinessWorld sought out MarCoPay President Toshiaki Fujioka and Chief Operating Officer Areson Rhonar I. Cuevas, to discuss the electronic money service, how it started, and how Filipinos seafarers will benefit from it. Below are excerpts of the interview:

FIRST OFF, HOW DOES MARCOPAY WORK? WHAT IS THE MAIN ISSUE THAT TDG AND NYK LOOK TO SOLVE THROUGH THE APP?

Mr. Fujioka: There are two phases. The first one, which will be available soon, is the settlement service. We replace the cash on board to digital money to reduce any cost, burden and risk of having cash on hand for both the vessel master and the crew. Having cash while at sea, they will have to take care of their money for a long time. There are also the risks of miscalculation, as well as exposure to piracy. So, our solution is digital currency.

For the second phase, we are focusing on the digital platform that will benefit the seafarers. Through the app, we will be able to bring additional services like financing, loans, insurance, and other financial products on top of the settlement.

Mr. Cuevas: For the business side, we are offering this product first to the ship management companies (SMCs) or to the companies that are in charge of making sure a vessel runs in layman’s terms. We aim to solve their pain point, which is having a lot of cash on board. Bringing actual cash from the shore to the vessel is very expensive as they will pay for that as well as the agency fee and insurance. This is also the reason why there are pirates. They know that there’s cash in the vessels.

So, we are minimizing the need to have tons and tons of cash on board by introducing the use of e-money to the SMCs to pay the salaries of the seafarers while on the vessel. Twenty percent of seafarers’ salaries plus overtime pay, risk premium, etc. are paid on board.

For the consumer side, directing their salaries to a digital platform is also a value added for the seafarers. If their family at home would need additional funds, they can transfer money anytime, anywhere. Recipients, on the other hand, can receive and cash out the e-money into a shared bank account with the seafarer.

When we enter phase two, we aim to improve their access to different financial products like loans. We know our seafarers. Sometimes Philippine banks overlook their economic potential because of the contractual nature of their work. We know that seafarers have usually been employed for a long time. If they shift careers, they could not earn as much as a seafarer would usually get. So, they tend to stick to this profession.

HOW DID THE IDEA OF ESTABLISHING MARCOPAY COME ABOUT? WHAT WERE THE MOTIVATIONS BEHIND THE TIE UP WITH NYK LINE, AS WELL AS CHOOSING ACCENTURE AND CITIBANK AS COLLABORATORS FOR THE E-MONEY PLATFORM?

Mr. Cuevas: TDG and NYK, the two shareholders of MarCoPay, have been in the maritime industry business for years. In 1976, TDG and NYK formed a joint venture company — the first one — wherein TDG crews NYK’s fleet vessels. We always look at the welfare of our seafarers because they are running our vessels. With this in mind, as well as the digital world right now and the improvements in fintech, we see that MarCoPay is a necessary move to be able to support the requirements of our seafarers.

For Accenture, we believe that they have the expertise in doing this type of system.

Mr. Fujioka: Recently, Accenture was tapped by Sweden’s central bank to develop their pilot project e-krona digital currency. Considering that this project is a cashless payment using mobile phones, we believe they can help us.

With Citibank as our partner custodian, the seafarers are assured that we have set aside an actual amount for their salaries, always ensuring full liquidity of the e-money within the system. It also helps to work with a bank that is trusted by many international corporations.

HOW DID THE BSP RECEIVE THE IDEA OF YOUR APP? WHAT WERE THEIR CONSIDERATIONS BEFORE GRANTING THE EMI LICENSE?

Mr. Cuevas: We have been closely coordinating with the BSP because they are the primary regulator. They have been very positive with the project because it is solving a pain point for shipping firms and it targets a market of more than 200,000 Filipino seafarers. MarCoPay aims to solve seafarers’ financial needs and make it easier for them to access financial products.

HOW DOES MARCOPAY COMPARE WITH SERVICES OFFERED BY OTHER REMITTANCE CHANNELS OR E-MONEY APPS? WHAT DO YOU THINK IS ITS EDGE?

Mr. Fujioka: The unique thing about MarCoPay is it uses a cloud-based ledger connected to a satellite network. In case the internet or data connection suddenly becomes unavailable or unstable, the seafarers are guaranteed their transaction will still be recorded properly. In the vessel, internet or data connection can be weak or none at all, depending on your location.

Mr. Cuevas: Business-wise, we have a market access advantage. Basically, TDG and NYK know their seafarers: their needs and who they are. This way, MarCoPay, has access to market information of their end users and can offer more suitable and much better products and services for seafarers. Other e-money service providers might be targeting the entire Philippine demographics or overseas Filipino workers, in general. For MarCoPay, we further segmented to seafarers.

WHAT WERE THE VITAL PREPARATIONS THAT YOUR COMPANY HAS MADE TO ENSURE THE APP’S SUCCESSFUL LAUNCH AND OPERATIONS?

Mr. Cuevas: The app development has been a very long and tedious process because this is very special. In a low internet access and connectivity, we have to make sure that the system works in this type of environment. In the vessels there are only two types of internet connectivity, either through VSAT (very small aperture terminal) or FBB (fleet broadband). Their speed-levels are not very fast unlike onshore. So, we have to make sure that each transaction will be recorded offline or in a low internet speed condition. This is why it took us a long time to finalize the system.

HOW DO YOU SEE MARCOPAY CONTRIBUTE TO YOUR BUSINESS? DOES THIS ALSO OPEN OTHER BUSINESS OPPORTUNITIES FOR YOUR COMPANY? IF SO, WHAT ARE THESE?

Mr. Cuevas: Yes, of course. By operating in an e-money platform, this will allow us to incorporate a lot of financial products. We understand that it is important for our seafarers to have better access to different financial products, but for now, we are focusing on the loans and the B2B (business-to-business) segment. Then we’ll see where it will bring us.

HOW DO YOU SEE USER TRACTION FOR MARCOPAY?

Mr. Cuevas: In a sense, we have guaranteed users. Since we are partnering with the SMCs, their policy will designate which portion of their seafarers’ salary (distributed on board) will be given in cash and e-money. This is still being discussed with our seafarers because they still want to receive actual cash, especially for spending when they dock. Also, being on the vessel for a long time, some would make it a hobby to count their money.

Based on the interviews that we conducted, most of the seafarers are open to the idea of receiving their shipboard pay in e-money. Most of them are already familiar with it and have been using other e-money services, such as GCash and Paymaya. This is most apparent with younger officers and seafarers.

WHAT ARE THE COSTS ASSOCIATED WITH USING THE APP?

Mr. Cuevas: Since other aspects are still being finalized, the basic principle is we will not make it more difficult for the seafarers compared to receiving their salaries in cash. So if they get their monthly cash on board for free, they will also receive it through e-money for free.

Similarly, transferring funds within the MarCoPay ecosystem — for example, transferring into another seafarer or to their wife or kids — will have a zero transaction fee. However, the charges on transferring from the app to a bank account is still being discussed, but we’re looking for the optimal way for them to enjoy zero fees.

WHAT ARE THE MEASURES THAT WERE PUT IN PLACE TO ENSURE SECURITY WHEN USING THE APP? ARE THERE SECURITY RISKS IN USING THE APP TO BEGIN WITH?

Mr. Fujioka: We’re really keen on security. We keep an eye for new technology solutions.

Currently, we require a one-time passcode (OTP) to make transfers using the app. Also, a user can only connect through one device.

In case a user loses his or her phone, he or she should contact our service centers, answer some security questions, and nominate a new one so he or she could install again. An OTP will be asked when logging in.

WHAT OTHER PRODUCTS OR SERVICES FROM YOUR COMPANY SHOULD WE LOOK FORWARD TO? ARE THERE OTHER FEATURES THAT WE SHOULD LOOK FORWARD TO FOR THIS APP?

Mr. Fujioka: Whatever we will launch in the first and second quarter this year would be specifically targeted to the B2B segment, on how SMCs will allocate their seafarers’ salaries on board.

For future functionality, what’s more exciting is how the seafarers can use that e-money.

Mr. Cuevas: On the second development phase of MarCoPay, we are [looking at offering] loan services… by partnering with financing companies. Since we know the credit standing of our seafarers, we know the risks. Hopefully, we can offer them better interest rates compared to how much they will get from the market.