Society management

Is the Philippines becoming a cashless society? – Manila Bulletin


Monchito Ibrahim

Today, we are witnessing the exponential growth of mobile payment transactions in the country. Statista reports that the Philippines is among the countries in the region experiencing sustained growth in mobile payment transactions today. The report said that in 2020, when the current pandemic started, the country had 24.6 million mobile wallet users and that number is expected to reach 75.5 million in 2025.

Another study by Hootsuite in 2019 indicates that more than 71% of Filipinos are active Internet users and more than 40% use mobile payment platforms. Just like our smartphones, mobile e-wallets have become an indispensable part of most Filipinos’ lives during this global health crisis. And it also emerges as a key driver for the rise of e-commerce during this pandemic.

Last Friday, April 8, I attended the 2nd meeting of the E-Commerce Promotion Council organized by the DTI, chaired by the DTI Secretary, Mon Lopez, and attended by public and private sector stakeholders. As highlighted in previous Tech4GOOD articles, the Philippines is considered one of the fastest growing e-commerce markets today. The growth is not only attributable to the lockdowns that have forced most of us to do everything online, but may also be due to the relative improvement in the country’s digital infrastructure, the accelerating pace of adoption e-wallet and a more robust logistics sector.

During the meeting, we heard reports from three government agencies heavily involved in the country’s e-commerce ecosystem, Bangko Sentral ng Pilipinas, the Bureau of Internal Revenue and the Bureau of Customs. They showcased ongoing initiatives that, for most of us in the private sector, are game-changing in terms of supporting the exponential growth of e-commerce in the Philippines. I would like to highlight the very proactive position of the BSP in promoting digital payments in the country. With highly innovative programs, including its partnership with Philippine Payments Management, Inc., BSP is creating an enabling environment for the realization of a cashless Philippines.

We are not saying that silver has lost its luster. Cash is still king, the most established and widely used payment instrument in the world. People trust cash, it’s free and readily available to everyone. It is private, impossible to hack and does not run out of battery. Digital payment solutions, however, offer more benefits tailored to the needs of a digital society.

The ease and convenience of using e-wallets for payments is probably the biggest motivation to go digital.

On the part of the consumer, it is no longer necessary to carry cash, credit cards or even queue for ATM withdrawals. Everyone is free to transact when and where they want. The merchant is easily paid and the buyer can easily complete the payment transaction using QR codes. E-wallets are said to provide some level of security due to the authentication features built into them.

Most e-wallet platforms provide a history of completed transactions, which will help people keep tabs on their spending habits and, if used correctly, should result in better budgeting. It may not seem like a significant advantage, but having no cash makes it easy to repel borrowers, and now you can pay the exact amount without worrying about getting the change back 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 the flow of money. It will be much easier to see where the money went and how it was spent.

A cashless society enabled by the last-mile digital transformation of money transfers, payments and banking services will help bridge the financial inclusion gap in the country. BSP highlighted the narrowing of the gap where the percentage of unbanked Filipinos has fallen to around 47% of the population from over 50% a few years ago. The financial inclusion deficit is a major concern for the country. But with the current trajectory, BSP is confident of reaching its target of 70% of the number of Filipino adults having bank accounts by the end of 2023.

A large number of Filipinos are unbanked for reasons other than lack of access. Daily wage earners focus more on maintaining their daily needs before thinking about saving money. They are also unaware of the benefits of savings. The biggest hurdle, however, would be the lack of documents, such as ID, required by financial institutions for account opening. Enrollment in the Philippines ID system, which requires registrants to have bank accounts, would help address this problem.

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 overcome some of the challenges of cashless to unlock the benefits.