The central bank said 30.3 percent of total retail payments have shifted in electronic payments (e-payments) as of end-2021, closer to the target of digitizing 50 percent of all transactions by next year.
Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla said the BSP and the financial sector has improved its capability for digital transactions and have increased the digital economy.
The e-payments total in terms of volume is higher compared to 20.1 percent in 2020, the first year of the pandemic. The lockdowns and mobility restrictions made it possible for millions of Filipinos to switch to digital payments or online transactions.
In terms of value, 44.1 percent of total retail payments are in digital form, up from 26.8 percent in 2020.
“The latest results show we are closer to meeting our objective of converting at least 50 percent of retail payment transactions to digital form by the end of 2023,” said Medalla on Wednesday, July 6.
Under the Digital Payments Transformation Roadmap, about 50 percent of payments in terms of volume should be digitalized by next year.
The BSP was able to migrate 30.3 percent of transactions into digital form because of merchant payments, peer-to-peer or P2P remittances, and business payments of salaries and wages to employees. All of these payment streams are high-frequency and low value retail transactions.
At the end of 2021, the volume of merchant payments rose by 43.8 percent, while P2P remittances increased by 268.6 percent.
Business payments of salaries and wages, meanwhile, grew by 170.2 percent last year. This indicates that for salary disbursements, businesses are transitioning from cash to digital channels, such as electronic fund transfers to bank or e-money accounts, said the BSP.
“The use of account-to-account electronic fund transfers could be seen as a result of expanding access to transaction accounts and the shifting preference of consumers toward the use of digital modes for payments,” said the BSP. “During the pandemic, Filipinos who had accounts were able to safely and conveniently conduct financial transactions using their mobile devices in the comfort of their homes,” it added
Digitalization or the shift from cash-heavy to cash-lite will have a significant impact on the economy. The BSP is still completing its data on the effects of e-payments, especially for small businesses which have taken into the digital migration swiftly due to the pandemic.
The bulk of retail payments continue to be payments to merchants for purchases of goods and services, and over 99 percent of businesses are micro, small and medium enterprises or MSMEs.
The BSP cited a study across 70 economies where the adoption of cashless payments has added $245 billion to the real GDP from 2015 until 2019.
Research findings showed that shifting towards a cash-lite system benefited business and economic activities as it would unlock economic benefits such as cost savings and a faster and more efficient payment systems.