The Future of Digital Payments in the Philippines

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The Philippines has been relatively slow to embrace digital payments compared to other countries of equal economic status, but the Covid pandemic has forced its hand in many ways. The country is built on cash but the rise of e-commerce, smartphone usage, internet connectivity, and a young and tech-savvy population have meant that digital payments are becoming increasingly common.

The two main applications, GCash and PayMaya, do what is expected of a standard digital payment app and more. Not only can you make payments using QR codes from your digital balance, but you can also use them as bank accounts to save into, sign up for personal insurance that they offer, and even invest in the stock market! What was once out of reach to the average person is now at their fingertips.

Cash has always been king in a country where corruption is rampant and is very embedded in many aspects of life, and this may explain a lot about why digital payments have had a relatively slow uptake until recently – those engaged in corruption at the highest level don’t want to leave a paper trail. Digital payments can help, and maybe in the future eliminate, this sort of corruption. Going back to the two main digital payment applications, GCash and PayMaya – these are very similar, but still not as comprehensive as WeChat in China, which even has social media built into it. They are, however, more comprehensive than apps you would find in western countries such as the US or UK, where there are many more digital payment apps, and market share is spread.

What do we envision for the future of digital payments in the Philippines? Well for one, in order for it to become more common, internet connectivity is going to have to improve immensely – no mean feat in an archipelago with over 7,000 islands. Digital payments are inherently reliant on the technological infrastructure, and the public and private sector has shown over the past few years that this is an area of priority for investment.

We also expect such payment systems to do more than what they do now. It is pretty much only a matter of time before they merge with food delivery services, transport companies and likely even have room booking systems linked to hotels within their apps. We have seen ride-sharing services such as Grab, move into food delivery, bills payment and even digital payments.

For a country that is quickly moving into digital payments, we are still seeing physical bank locations rising as more rural towns begin to develop and the local population transition into working in the formal sector. Physical banks are closing down in developed countries due to the majority of bank transactions occurring online, however, in countries such as the Philippines where labour is relatively cheap, they are still in the earlier stage of their lifecycle. This will likely not change just because more payments are becoming digital.

Digital payments are on the up in the Philippines and will continue to rise rapidly for the foreseeable future, but we cannot yet rule out the importance of cash anytime soon until the infrastructure around the digital economy is brought up to the required levels.

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