The digital payments landscape in the Philippines has experienced significant growth in recent years, with the use of e-wallets starting to proliferate and industry players forming partnerships to be able to access new capabilities and broaden their customer base.
One of the key factors driving the growth of digital payments in the Philippines is the widespread use of mobile phones. This has made it easier for consumers to adopt digital payment options and has enabled merchants to accept digital payments without the need for specialized equipment such as credit card terminals.
These were just some of the findings of a survey made by Insider Intelligence on smartphone usage in the Philippines, where it was found that nearly 90% of Filipinos own a smartphone with mobile Internet. Many of these devices are also equipped with the ability to make digital payments.
In Southeast Asia, the report also forecasts that the number of smartphone users will reach 326.3 million in 2023 and will rise steadily through 2026. Based on the same report, smartphone usage spiked during the pandemic as consumers started using smartphones for a range of purposes, including gaming, food delivery, and mobile payments.
According to Insider Intelligence, such a trend is expected to continue into the future, with these market sectors standing to gain as Internet usage expands. As such, banks, fintech firms, and telecom companies must be able to quickly develop new strategies in competing for market share.
The rising popularity of digital payments in the Philippines
It had been a cash-first society for the longest time in the Philippines, with even other common payment modes such as credit cards and debit cards now being used by only two per cent of the entire population.
With the eventual popularity of digital payments in the Philippines, financial services have since become much more broadly available. It has also become more easily accessible to Filipinos.
Starting in 2021, a number of players in the Philippines have started to digitalize their payment systems, and these players include online payment platforms, e-wallet providers, and even banking institutions.
For a large majority of Filipinos, digital payment alternatives presented a potential for some measure of financial independence — many of which are scattered throughout the vast network of over 7,000 islands that make up the Philippines and thus often have limited access to traditional payment infrastructures.
Some of the most popular digital payment options in the Philippines include virtual wallets like PayMaya and G-Cash, as well as Coins.ph, a blockchain-based cryptocurrency exchange and wallet. These platforms provide consumers with the ability to pay for goods and services online, transfer funds to other users, and make payments at physical retail locations.
Promoting the adoption of digital payments in PH
In addition to the growth of mobile payments, the Philippine government has also since taken steps to promote the adoption of digital payments in the country.
For instance, the Bangko Sentral ng Pilipinas (BSP) introduced the National Retail Payment System (NRPS) in 2015 in an effort to promote the development and use of electronic payments throughout the country. This retail payment system has since helped increase the availability and accessibility of digital payments.
In December last year, the BSP also collaborated with the Philippine Payments Management Inc. (PPMI) to launch Bills Pay Ph, an interoperable facility that aims to unify several bill payment networks under one central umbrella. The program promotes ease of use because payees and billers don’t even need to have each other’s corresponding data anymore, as it is already a universal billing system.
The Philippine central bank also introduced programs to encourage the use of digital payment systems, such as the establishment of a clearing house for digital transactions and the creation of a national QR code standard. The national QR standard is an easy-to-roll-out, easy-to-scale solution that can quickly onboard a fast-developing economy without the need for costly and time-consuming infrastructure upgrades.
It also introduced PESONet and InstaPay, two electronic fund transfer facilities that are a part of the BSP’s “Digital Payments Transformation Roadmap,” a roadmap that aims to increase the total number of formally banked adults in the country to around 70 per cent by the end of this year, and simultaneously hiking the share of the digital payments market to about half of the total in the same time frame.
The BSP has also recently concluded testing the use of stablecoins, cryptocurrencies backed by fiat assets such as the US dollar, as a mode of payment. The move can be seen as a channel to improve cross-border remittances from the millions of Overseas Filipino Workers (OFWs).
The country’s central monetary authority is now also in the process of finalizing a framework for MSMEs that would enable them to fast-track their digital transformations by permitting access to basic merchant accounts at an accelerated pace. Its aim is to speed up financial inclusion for small business operators and those working in the gig economy, such as tricycle drivers, who have monthly incomes of about P100,001 and P500,000.
These measures could hopefully create a more conducive environment for the growth of digital payments in the country. With the continuing support of the government, it is likely that the use of digital payments will continue to grow in the Philippines.