More than half of e-commerce payments made in the Philippines have been through cards as the number of consumers shifting from offline to online purchases has started to rise during the pandemic.
This was one of the findings of GlobalData’s “2022 Financial Services Consumer Survey,” which also noted that the Philippine e-commerce market may be expected to grow by 22.9% and reach P615.70 (US$12.10 billion) in 2023.
The survey was made across 40 countries and was carried out in the second quarter of last year with approximately 50,000 respondents aged 18 years old and above.
GlobalData’s E-Commerce Analytics further revealed that the country’s e-commerce market has since reached P500.9 billion ($9.8 billion) in 2022 for an estimated growth rate of 31.3% compared to the same period in 2021.
PH is one of the fastest-growing e-commerce markets in SEA
According to GlobalData’s 2022 Financial Services Consumer Survey, nearly 90% of the Filipino consumers surveyed have shopped online in the past six months, while only 6% indicated they never shopped online.
“The Philippines is one of the fastest growing e-commerce markets in Southeast Asia, supported by high Internet and smartphone penetration. Furthermore, the COVID-19 pandemic has accelerated the shift in consumer preference from brick-and-mortar to online channels,” said Shivani Gupta, Senior Banking and Payments Analyst at GlobalData, in a press statement.
“The growth of e-commerce in the Philippines has since been boosted by government initiatives such as the ‘Philippine e-Commerce Roadmap 2020,’ which aims to promote e-commerce adoption among SMEs. The emergence of new payment models such as buy now pay later, which allows consumers to split total purchase amount into instalments are also some of the factors supporting alternative payments growth,” adds Shivani.
Several players — including Atome, BillEase, Akulaku, Cashalo, UnaPay, and TendoPay — are now offering this service in the Philippines. E-commerce platform Lazada has also joined the list with its BNPL service ‘LazPayLater’ that was launched in November 2022.
GlobalData’s survey also revealed that among various tools used for e-commerce purchases, payment cards dominate, with debit, credit and charge cards collectively accounting for 51% share in 2022. This can be attributed to the value-added benefits being offered on payment cards, including interest free instalment payments, reward programs, cashback, and discounts, among other perks.
GCash, PayPal, and PayMaya as second-most preferred payment tools
Alternative payment tools such as GCash, PayPal and PayMaya are the second most preferred payment tools for e-commerce purchases, collectively accounting for 24.5% share of transaction value in 2022.
Despite the rise in electronic payments, over 15% of e-commerce purchases in the Philippines are still made using cash.
This highlights the traditional preference for cash among Filipino consumers due to its high unbanked population and limited financial awareness, especially among rural population.
In conclusion, Shivani also had this to say, “The Philippines will continue to witness high growth in e-commerce sales and increase at a compound annual growth rate (CAGR) of 17.9% between 2022 and 2026 to reach PHP968.9 billion ($19.0 billion) in 2026.”
“Although alternative payments are gradually displacing cash and other traditional payment methods, they still have a long way to go before they can challenge the dominance of payment cards,” he added.