E-payments climb 20.1% of all transactions – BSP

Published October 7, 2021, 5:47 PM

by Lee C. Chipongian

Digital payment transactions at end-2020 has climbed to 20.1 percent of total payments in the country, slightly higher than the central bank’s 20 percent target for the period, driven by the growth in payments to merchants (P2M) and person-to-person (P2P) payments.

“Put simply, one out of five retail payments in the country was transacted digitally at end-2020,” said Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno in a virtual press briefing on Thursday, Oct. 7. In terms of volume, this was about 910 million transactions in 2020.


The pandemic lockdown restrictions increased the use of digital channels or e-payments.

The 20.1 percent share of digital payments to total transactions were up by 10 percentage points when compared to 10 percent in 2018. It was also higher than the nine percentage point rise posted during the five-year period of 2013 to 2018. In 2013, only one percent of transactions are in e-payments.

The BSP’s target is to get at least 50 percent of all payment volume into digital form by mid-2023. At this rate, Diokno reiterated that they could reach the target ahead of schedule.

At the end of 2020, the share of digital payments to total value of transactions increased to 26.8 percent or P1.67 billion ($33 million). The key drivers were merchant payments, P2P payments and government-to-people (G2P) salaries and payroll.

The P2M grew by 47.8 percent year-on-year in 2020 to some 773 million transactions, while P2P payments went up by by 18.1 to 42 million transactions. The G2P’s 15 million transactions was a recorded 100 percent increase as the payment of salaries to government employees was fully digitalized by the end of 2020.

“We are seeing an accelerated rate of increase in the usage of digital payments. This could strongly indicate that Filipino consumers are moving away from conventional cash payments toward digital payments,” said Diokno.

Diokno said that the BSP instead of setting yearly targets on the share of digital payments to total payments, has been mainly focusing on ensuring that digitalization initiatives such as the QR Ph P2M, Bills Pay, Request to Pay-PESONet, multi-batch settlement, and Direct Debit will be “smoothly and timely implemented.”

“These will expand digital payment products and services specifically directed to transform the P2X (payments of persons) and P2X use cases that hold the biggest potential in shifting the level of digital payments adoption in the country,” said Diokno.

Philippine Payments Management Inc. (PPMI) president Abraham Co, who was also in the BSP online briefing, said that other than the QR Ph P2M, which will be launched on October 12, the group is also looking at “bigger ticket items” such as digital invoicing between firms for payment, and the Direct Debit which he said should be quite useful in the transport business.

Direct Debit is a “sister transaction of the present QR Ph,” said Co. He said the QR Ph via InstaPay will hopefully replace more transactions between people and merchants. QR (short for Quick Response) Ph standardized the country’s QR Codes in 2019 which allow electronic payments and transfers by simply scanning the code.

PPMI general manager Carmelita R. Araneta said there are a lot of challenges to hurdle before shifting 50 percent of all payments into digital form, including issues on infrastructure or telecommunication connectivity, investments in upgrading core banking systems and allocation of resources, technology and manpower. “In short, a shift from legacy systems in banks from brick-and-mortar models to digital models” will cost a lot, she said. Another crucial challenge is dealing with fraud and cybersecurity issues.

In addition, Araneta said out of 554 financial institutions, only 141 are PPMI members, or 25 percent of the industry. “But, (we’ve onboarded) 100 percent of universal and commercial banks (and) this shows their readiness in adopting digital payments. It is the thrift and rural banks that have yet to participate because of the challenges mentioned,” she said.

BSP Deputy Governor Mamerto E. Tangonan, for his part, said he’s banking on the QR Ph P2M to have the most significant impact in shifting more transactions as e-payments in the next years.

“The QR Ph P2M would be of great impact because as we know, merchant payments alone already constitute (78.1 percent) of total retail payments volume, and since we have 80 percent more to conquer, that is a rich field for harvesting additional digital payments growth,” said Tangonan.

P2X payments have the lion’s share of the total retail payments volume at 78.1 percent while the business sector or B2X payments have high value transactions and accounted for 64.3 percent of the total retail payments.

“A tool like QR Ph P2M that is low cost, has the potential of even reaching MSMEs (micro, small and medium enterprises) and even informal merchants therefore making the opportunity to access digital payments and use it, even more ubiquitous. With these developments, we are confident this will have a great impact on further growth of digital payments to achieve our target of 50 percent,” Tangonan added.