Cash is still king the Philippines, according to the latest report of ZALORA, the Singapore-headquartered online fashion, beauty and lifestyle retailer operating across Southeast Asia. Despite the country's growing e-commerce and digital payment market, it struggles to establish universal cashless transactions due to limited internet access, low financial literacy, a large informal economy, and a preference for cash transactions, according to the ZALORA report. On the other hand, the pandemic situation has revealed the importance of digital payments ascwell as existing barriers and disparities in access to technology. To address such challenges, the government, financial institutions, and technology providers should work together, accordingvto thr online retailer. They should improve the infrastructure, enhance financial education and promote the benefits of cashless payments to encourage greater adoption in the future. Last year, shoppers cashless transactions in ZALORA grew 81.20 percent regionwide, up from 74.61 percent in 2020 as connectivity and digitisation fueled hyperconsumerism in Southeast Asia. Transactions closed through the cash-on-delivery (COD) payment method have significantly declined in the last two years to between 15 percent and 20 percent from the previous 25 percent, according to the online retailer.
“Despite the positive outlook, the payment landscape in Southeast Asia remained incredibly fragmented," observed Achint Setia, ZALORA chief revenue and marketing officer. "In fact, due to the region’s diversity, integration from market to market is generally difficult for a single player to do at a payment level,” he explained. Significantly, cash transactions in the Philippines reverted to pre-pandemic levels, ZALORA's Southeast Asia Trender Report 2022 revealed. This is due to the archipelagic topography of the country. “The challenge with the Philippines is its topography, which is a lot more diverse, and more spread out. There is a challenge, even logistically for digital incumbents to expand,” Setia pointed out.
“Even from an offline market and building trust, it's tricky with so many different segregated and fragmented islands.” Customers, who are in remote places, are reluctant to use digital payment methods and opt to play it safe by relying on COD. “Brands and platforms should continuously incentivise customers to move to digital by streamlining the purchase journeys,” Setia suggested. “If brands can reduce the time from carts to final payment in just one or two clicks, and also build comfort among customer in refunding their money; if they can do it consistently and repeatedly, then they will trust your returns and refund policy and some of these challenges can be overcome,” he underscored. While consumers have become more comfortable with real and virtual worlds, they still struggle between the two as they seek personalised and more humanised experiences, without foregoing convenience. On this note, Setia said retailers and brands should not be racing for total digitisation to reach last-mile purchasers. Rather, the race should be geared towards “an attempt for agility in a volatile climate and an attempt to make sure that experiences across touchpoints are streamlined.” “Brands and sellers just need to ensure that they remain flexible. They should keep trying new business models to overcome the current challenges because they are not going away in a hurry,” he concluded