Cashless Philippines: Becoming a Cash-Lite Economyby Rebecca Oi November 21, 2022
The Philippines has been gaining tremendous momentum in its bid to become a cashless society. Such is the speed of the process that, according to the latest Visa Consumer Payment Attitudes Study, 92 percent of Filipinos have been using multiple cashless methods to shop and pay. About 61 percent of Filipinos have used less cash in their wallets, resulting in fewer cash transactions (60 percent).
The study also showed the Philippines has the highest awareness of QR code payment in the Southeast Asia region, with the covid pandemic accelerating the consumer expectations of The Philippines becoming a cashless society by three years. Several other factors contribute to the country’s seamless and quick transition.
Favourable government regulations for a cashless society
The government’s inclination towards using digital payments can be traced back to the launch of E Gov Pay, which enables consumers to settle payments to government institutions. Since then, transactions at EGOV PAY have rocketed, with the Bangko Sentral ng Pilipinas (BSP) reporting that the number jumped by 467 percent to over 91,000 at the end of 2021 from just around 16,000 a year earlier.
“The sustained increase in the use of EGov Pay, even after mobility restrictions were lifted, proves the shifting preference of consumers towards greater adoption of digital payments,” said BSP Governor Benjamin E. Diokno.
The central bank added in a separate statement, “By participating in EGov Pay, government institutions can efficiently collect revenues, which are crucial to their delivery of public and social services. Moreover, the government may curb revenue leaks through the efficient collection, better audit trails, and enhanced transparency.”
The government’s endorsement of PayMaya, now known as Maya, a financial services and digital payments provider, enabled national agencies and local government units (LGUs) to accept cashless payments and disburse financial aid anytime, anywhere.
According to The Star, there are over 60 government agencies and units at both national and local levels – including the Bureau of Internal Revenue (BIR) and Social Security System (SSS), has chosen Maya’s platform to provide citizens and businesses with a safer and better way to pay for taxes and fees.
Fees on micro-transactions
BSP has removed the fees in micro-transactions in a bid to help the cashless transition in the country. Under the QR Ph Person-to-Merchant (P2M), these moves allow payments for micro-enterprises to be less hassle and support daily micro-transactions such as payments to tricycle services, market vendors, and sari-sari store owners.
Instapay is an electronic fund transfer (EFT) service launched by the Bangko Sentral ng Pilipinas (BSP) in 2018. It allows users to transfer funds from bank accounts to e-wallets or vice versa, enabling low-value transactions to happen safely, in real-time, and at a reliable platform. The service connects banks and non-bank electronic money issuers (EMIs) in the Philippines.
With transactions of up to ₱50,000 for each user daily and governed by the rules and service levels of the Automated Clearing House (ACH) participants, Instapay appeals to the mass market through its safe and real-time way of sending and receiving money electronically at no cost.
E-wallet companies such as GCash and Maya also contributed to the Philippines being cashless, as these platforms enable cashless payments in the market while offering solutions such as lending, crypto-trading and micro-investments.
GCash allows users to fund their wallet in the app and perform transactions to another GCash wallet, other e-wallet systems, and bank accounts. If users open a Savings Account, users can enjoy the best interest rates that can go up to 4.1 percent annually.
GCash also lends money to users via GLoan, allowing lenders to get ₱50,000, pay as low as ₱260 per month, and stretch payment terms up to 12 months. GGives gives users an option to split the payment for a purchase (BNPL) at low interest with flexible payment terms from three months to 12 months.
Maya is another e-wallet player in the Philippines, and as mentioned earlier is endorsed by the government for good reasons. Apart from the standard features of paying and receiving funds, Maya goes beyond being just another e-wallet service.
“The Maya brand represents the next stage of financial services in the Philippines. With Maya, we will accelerate financial inclusion in the country as we provide more Filipinos with meaningful products and services that will improve their access to savings and productive capital,” said Angelo Madrid, President of Maya Bank.
Users can purchase gaming pins on popular games and platforms such as Mobile Legends, Garena, and Steam. The e-wallet offers travel services ranging from booking flight tickets and hotels to disbursing payments to tour guides and employees on business trips.
Users can also purchase insurance covering their online purchases and getting insured up to ₱8,000 per claim, protect their mobile devices from premiums as low as ₱21, and insurance plans from ₱85 to ₱105 per month offering up to ₱20,000 of cash assistance.
Advantages for growth in the Philippines
The Philippines will have the seventh-largest population in Asia in 2022, with almost 100 million. And with an average growth of 1.35 percent, amounting to an increase of 1,464,463 per year, the market potential for cashless innovations is endless.
With supportive government policies and new tech additions to modernise society, soon, there might not be a Filipino who would bring a physical wallet to go shopping or have a casual dinner with friends or family.
Featured image credit: Freepik