50% of all payments now digital – BSP official
The Bangko Sentral ng Pilipinas (BSP) likely achieved its target of migrating 50 percent of all payment transactions into digital form in 2023 but the actual data will be confirmed by July this year yet, according to a central bank official.
“We’ll let the data tell us,” said BSP Deputy Governor Mamerto E. Tangonan, who is in charge of the BSP Payments and Currency Management Sector.
“It’s just that the butterflies in my stomach tells me we (reached 50 percent last year),” he told reporters. He has committed to disclose the results of the 2023 Status of Digital Payments in July this year.
Tangonan further supported this in a statement released by the BSP on Monday, Feb. 5, when he said, “I believe we reached our 50-percent target by the end of 2023.”
Based on the BSP’s Digital Payments Transformation Roadmap and its National Strategy for Financial Inclusion, by end-2023, half of all payment transactions should be in digital form while 70 percent of adult Filipinos should have formal accounts.
As of the end of 2022, data showed that 42.1 percent of all payment transactions had shifted to digital while 56 percent of Filipino grown ups have financial accounts as of the end of 2021.
The increase in account ownership was attributed to the uptake of e-money accounts, which climbed to 36 percent in 2021 from eight percent in 2019. This became the most common type of account among adults in the middle class and low-income population, as well as with those aged 15 to 49 years old, said the BSP.
The share of digital transactions in total payments has been growing steadily with both InstaPay and PESONet. Also, more people are using the QR Ph code for payments.
Tangonan said they could onboard more if all sectors of the masses will transact digitally by mounting a more aggressive campaign to promote digitalization.
“We need to inform, to spread the information that when you see a QR Ph, regardless of your account – a bank or e-wallet you're using – you’d be able to pay. We’ve done a lot and we’ve made improvements (in the info campaign),” he said.
However, Tangonan said there are still a lot of income segments that are not digitally-inclined and they want to reach these sectors.
In the same BSP statement on Monday, the central bank reiterated that it remains confident that the “sustained rise of digital payment technologies will continue to facilitate the efficient delivery of financial services to the unbanked and micro-, small-, and medium-enterprises (MSMEs).”
The shift to e-payments have steadily grown due to the momentum it achieved during the pandemic, when the lockdowns or movement restrictions forced the public to transact digitally.
When the BSP started this, only one percent of transactions was in digital form in 2013. By 2018, the volume increased to 10 percent and then to 14 percent in 2019.
By the time the pandemic hit the globe, digital payments expanded to 20.1 percent of all transactions in 2020 and to 30.3 percent by 2021.
The BSP noted that the impact of the digital transformation is evident at the grassroots level.
Based on the BSP’s latest e-payments data, the 42.1 percent represents the share of monthly digital payments to total monthly retail payments volume in the country.
The BSP was able to migrate more transactions into digital form because of merchant payments, peer-to-peer (P2P) remittances, and business payments of salaries and wages to employees. All of these payment streams are high-frequency and low value retail transactions.
The report on the BSP’s 2022 Status of Digital Payments showed merchant payments continue to lead in the digital payments usage. It increased by 35.6 percent year-on-year. From 1.112 billion transactions in 2021, electronic payments to merchants have reached 1.507 billion in 2022.
Meanwhile, P2P transfers rose by 91.2 percent in 2022 to 299.7 million transactions from 156.7 million in 2021.
Salaries and wage payments also increased by 41.1 percent to 45.1 million from 32 million transactions in 2021.