Quick adaption of online payment services
With a sizeable share of the banked population in the Philippines, cashless payment alternatives allow the unbanked to access financial infrastructures otherwise inaccessible to them. These digital payment services allow them to pay for products and services purchased from e-commerce platforms or conveniently send money in the comforts of their homes. Among the most popular e-payment services used in the Philippines were mobile or digital wallets, available in the country as early as 2001. Signing up only requires a phone number and a valid ID. In 2020, nearly 25 million Filipinos used mobile wallets to make or accept online payments. Domestic players GCash and Maya continue to lead the mobile wallet market in the Philippines.
Aside from mobile wallets, QR-based payments were also essential alternatives in recent periods. The Bangko Sental ng Pilipinas, the country’s central bank, introduced QR PH in November 2019 for peer-to-peer (P2P) payments. Two years later, the person-to-merchant (P2M) payment system was also created to allow payments to establishments such as drug stores and department stores. As of April 2022, the number of merchants participating in this payment method increased by 70 percent compared to the previous month. QR PH P2M will soon be rolled out for bill payments.
Meanwhile, buy-now-pay-later (BNPL) schemes have also started gaining popularity in the Philippines due to ease of use, especially for purchasing electronic gadgets and home appliances. Such is also the case for embedded finance applications used multiple times each week, as revealed by a recent survey.
The future of digital payment
While the pandemic boosted digital payment usage, the foundation for its successful uptake was already there. Filipinos have high mobile literacy, with an estimated 74 percent owning a smartphone. Remittances from overseas Filipino workers (OFWs) also contributed to this as online remittance services allowed transfers straight to a recipient’s mobile wallet, aside from cash pickup locations. Furthermore, more merchants started accepting alternative payment methods alongside credit and debit cards.
Online card payments, bank or electronic fund transfers, direct debit, and mobile contactless payments were also available in the Philippines. Cryptocurrency was also being considered as a payment option. Such payment methods were in line with the goal of the Central Bank in making the Philippines a cash-lite society. In 2022, about 40 percent of the total volume of payment transactions was made online, drawing the Philippines closer to its goal of raising the total retail transactions to 50 percent in 2023.
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