Digital is the future and it’s here

Published July 11, 2021, 8:00 AM

by Lee C. Chipongian

In this new world, safety is priority

The COVID-19 pandemic and the consequent lockdowns and movement restrictions compelled Filipino consumers to shift from cash to digital payments, and the use of digital platforms for fund transfers, InstaPay, and PESONet has increased tremendously.

As of end-May this year, the volume of e-payment transactions via InstaPay surged by 155.4 percent year-on-year while PESONet transfers grew by 22 percent.

The volume and value of InstaPay totaled 38.21 million and ₱221.9 billion, while PESONet volume and value totaled 5.61 million and ₱341.8 billion as of end-May.

Both InstaPay and PESONet, which enabled contactless financial transactions, were made possible under the central bank’s National Retail Payment Systems (NRPS).

The Bangko Sentral ng Pilipinas (BSP) and the banking community expect social mobility restrictions that are still in place today will continue to provide that jump in the use of digital payments in the country.

The PESONet and InstaPay are automated clearinghouses under the NRPS. PESONet is a batch of electronic fund transfer (EFT), which can be considered as an electronic alternative to the paper-based check system. On the other hand, InstaPay is a real-time, low value EFT for transaction amounting up to ₱50,000, which is useful for e-commerce.

The BSP launched the “Digital Payments Transformation Roadmap” in October 2020. It brings with it a goal of transforming the Philippines from a cash-heavy to a cash-lite society by converting 50 percent of retail payment volume to digital by 2023. By end-2020, it’s nearer to 20 percent, with the pandemic providing the catalyst for its surge.

With more digital financial services, the BSP is also aiming to have 70 percent of Filipino adults with financial accounts in two years. Based on the 2019 Financial Inclusion Survey, account ownership among Filipino adults increased by 23 percent in 2017 to 29 percent in 2019.

In 2020, e-money accounts increased by 8.1 million to 37.5 million versus 29.4 million in 2019, based on BSP data. The uptake in e-money account ownership increased from just one percent in 2017 to eight percent in 2019. The percentage of account holders who use their accounts for payment transactions also doubled, from 18 percent to 39 percent. The BSP’s new bank category, digital banking, is expected to accelerate the growth of e-money accounts. So far, there are three digital bank licenses approved.

As part of its digital literacy campaign, the BSP, along with the banking industry, is always reminding consumers to get in the habit of practicing good cyber hygiene and vigilance against online frauds and scams.  

The BSP wants cybersecurity awareness and cyber risk management to be part of Filipinos’ everyday routine. It strongly advocates that “digitally literate consumers not only understand digital financial services usage, they also know the risks of usage and have the ability to protect themselves from such risks (and are) aware of consumer rights and redress procedures.”

These campaigns such as the #SafeAtHome with E-payments are conducted with the Department of Education and the Department of Social Welfare and Development.