TECH4GOOD
Monchito Ibrahim
Today, we are seeing the exponential growth of mobile payment transactions in the country. Statista reports that the Philippines is among the countries in the region that is today seeing sustained growth in mobile payment transactions. The report says that in 2020 when the current pandemic started, the country had 24.6 million mobile wallet users and this number is forecasted to reach 75.5 million in 2025.
Another study done by Hootsuite in 2019, says over 71 percent of Filipinos are active internet users, and more than 40 percent are using mobile payment platforms. Just like our smartphones, mobile e-wallets have become an indispensable part of most Filipino lives during this global health crisis. And it is also emerging to be a key driving force behind the boom in e-commerce during this pandemic.
Last Friday, April 8, I attended the 2nd meeting of the DTI-organized E-Commerce Promotions Council which was chaired by DTI Secretary Mon Lopez and attended by players from both the public and private sectors. As highlighted in previous Tech4GOOD articles, the Philippines is seen today as having one of the fastest-growing e-commerce markets. The growth is not just attributable to the lockdowns which forced most of us to do everything online but, may also be because of the relative improvement of the country’s digital infrastructure, the accelerated pace of e-wallet adoption, and a more robust logistics sector.
During the meeting, we heard reports from three government agencies much involved in the country’s e-commerce ecosystem, Bangko Sentral ng Pilipinas, the Bureau of Internal Revenue, and the Bureau of Customs. They presented ongoing initiatives that, for most of us from the private sector, are game-changing in terms of sustaining the exponential growth of e-commerce in the Philippines. I would like to highlight the very proactive stance of the BSP in promoting digital payments in the country. With very innovative programs, including its partnership with the Philippine Payments Management, Inc., BSP is building the enabling environment for the cashless Philippines to happen.
We are not saying though that cash has lost its luster. Cash is still king, the most established and widely used payment instrument in the world. People trust cash, it is free to use and readily available for everyone. It is private, unhackable, and does not run out of battery power. Digital payment solutions, however, offer more benefits that are attuned to the needs of a digital society.
The ease and convenience of using e-wallets for payments is probably the biggest motivator to go digital.
On the part of the consumer, there is no longer a need to carry cash, credit cards, or even line up for ATM withdrawals. Everyone has the freedom to transact whenever and wherever they want. The merchant easily gets paid and the buyer can easily make the payment transaction with the use of QR codes. E-wallets would provide some level of security because of the authentication features embedded into them.
Most e-wallet platforms provide a historical record of transactions done which will help people keep a tab on their spending patterns and if used properly, should result in better budgeting. It may not look like a significant benefit but being cashless makes it easy to fend off borrowers and you can now pay the exact amount without worrying about not getting back the change from the merchant.
Digital payment solutions could be an effective tool in the fight against corruption and organized crime. Assuming everyone would be connected to a cashless environment, there would be transparency in money flows. It will be much easier to see where the money went and how it was spent.
A cashless society enabled by the digital transformation of the last mile of money transfers, payments, and banking services will help close the financial inclusion gap in the country. BSP highlighted the narrowing gap where the percentage of unbanked Filipinos has gone down to about 47 percent of the population from over 50 percent some years back. The financial inclusion gap is a major concern of the country. But with the current trajectory, BSP is confident of hitting its 70 percent target in the number of adult Filipinos with bank accounts by the end of 2023.
A huge number of Filipinos remain unbanked for reasons other than lack of access. Daily wage earners are more focused on sustaining their daily needs before thinking about saving money. They are not also aware of the benefits of savings. The biggest barrier, however, would be the lack of documents, like IDs, required by financial institutions for account opening. The registration for the Philippine Identification System which requires registrants to have bank accounts would help address this issue.
Closer collaboration between the private and public sectors would go a long way in harnessing the benefits of innovations in digital payments and realizing the full potential of a cashless society. There is no turning back. We need to face the risks and deal with some of the challenges of going cashless to unlock the benefits.