In the Philippines, real-time payments have experienced considerable growth in recent years. In 2023, instant payments accounted for 47.2% of all electronic payments, up from 40.3% in 2022 and 24.7% in 2020, according to a report by ACI Worldwide, an American payment systems company.

By 2028, real-time payments are projected to grow to constitute 58.7% of cashless transactions, rising at a compound annual growth rate (CAGR) of 14.6% between 2023 and 2028.

The “2024 Prime Time for Real-Time” report, released on April 30, provides insight into real-time payments’ progress in 51 countries. It highlights continued growth in the Philippines, with 777 million real-time transactions 2023 and a forecasted 1.5 billion instant transactions by 2028.

These findings are supported by Visa’s latest Consumer Payment Attitudes Study. The study, based on online interviews conducted from October to November 2023 with 1,000 Filipino consumers aged 18-65 years old, found that Filipinos are increasingly adopting cashless transactions.

According to the study, about nine in ten Filipinos are aware of and interested in using contactless cards and QR codes when paying for their transactions.

Specifically, 32% of Filipinos used contactless cards for their payments in 2023, mainly driven by the affluent population. Meanwhile, 55% used QR codes, with at least 50% adoption across age groups except for consumers aged 59-65 (31%).

Among mobile wallet users, paying through QR codes is the most preferred method for 38% of consumers, making mobile wallets the most preferred funding source for QR payments. Scanning the QR code in-store is the preferred mode of payment by 78% of its users.

Despite the rise of real-time payments, the Philippines remains heavily reliant on cash. In 2023, cash represented a staggering 98.1% share of payment volume, while for the same period, real-time payments only represented 0.9% of payment volume, data from the ACI Worldwide report show.

A study conducted by merchantmachine.co.uk places the Philippines among the top 10 countries relying on cash transactions, specifically in the seventh position, with approximately 66% of Filipinos continuing to operate without bank accounts.

Real-time payments in the Philippines

The Philippines introduced its real-time payments system, InstaPay, in 2018. InstaPay allows for instant fund transfers between banks and non-bank electronic money issuers (EMIs) using a smartphone, tablet, or laptop.

The system facilitates payments using account numbers, QR codes, or registered local mobile numbers and supports interoperable QR payments at local stores. The maximum amount per transaction is PHP 50,000 (US$856) for person-to-person payments.

In addition to InstaPay, the Philippines operates PESONet, another electronic fund transfer service run by the Philippine Clearing House Corporation (PCHC).

PESONet processes transactions in bulk, clearing multiple times a day. Transfers conducted before the cut-off time are received within the same banking day, while those after cut-off or on non-banking days are completed on the next banking day.

These new systems are part of the Bangko Sentral ng Pilipinas (BSP)’s Digital Payments Transformation Roadmap 2020-2023, a national plan to promote the digitalization of the country’s payment systems. Key goals under the plan include to digitize half of the retail payment volume and increase financial inclusion to 70% of Filipino adults by 2023.

The Philippines is also aspiring to connect its InstaPay system with other Southeast Asian real-time payment systems.

The project, overseen by the Bank for International Settlements, aims to enable payment connectivity to enhance cross-border payments between Indonesia, Malaysia, Singapore, Thailand and the Philippines.

Separately, the Philippines is part of the Regional Payment Connectivity (RPC), an initiative to link all Association of Southeast Asian Nations (ASEAN) countries under a single QR code-based cross-border payments system. So far, a total of eight countries have joined the RPC.

India as the world’s biggest real-time payments market

Taking a deep dive into some of the world’s leading real-time payments markets, the ACI Worldwide report highlights India as the biggest instant payments player.

The country processed almost 130 billion real-time payments in 2023, accounting for 49% of total global real-time transactions. This figure surpasses the combined real-time payments of the next nine countries in the global market, the report says.

The Unified Payments Interface (UPI), developed by the National Payments Corporation of India and established by the Reserve Bank of India and the Indian Banks Association, has been instrumental in this success.

Launched in April 2016, UPI allows real-time payments using QR codes, mobile numbers, and virtual identification. Its reach extends across 500 banks, significantly boosted by the government’s demonetization mandates and the inclusion of non-bank players.

In India, real-time payments constituted 84% of electronic transactions in 2023 and accounted for more than half (53.4%) of India’s transactions. As consumers increasingly shift from cash- to mobile-based real-time payments, ACI Worldwide expects the share of real-time payments to reach 69% of all transactions by 2028.

Indonesia leapfrogs ahead

Indonesia launched its first real-time payments system BI-FAST in December 2021.

Though a late entrant, the country has quickly emerged as one of the world’s fastest-growing real-time payment markets, with almost 2 billion real-time payment transactions in 2023 and a CAGR of 44.6% between 2023 and 2028.

BI-FAST is a real-time payment system designed to facilitate efficient and secure electronic transactions. It enables instant money transfers and payments using account details, mobile numbers, or email addresses, and operates 24/7. BI-FAST is key part of Indonesia’s Payment System Blueprint IPS 2025, which aims to transform the country’s payments infrastructure and integrate its digital economy.

In 2023, real-time payments accounted for 2.7% of transactions in Indonesia, a share that’s expected to rise to 13.1% by 2028. Instant payments constituted 11% of cashless transactions, a figure that’s forecasted to rise to 35.4% by 2028.

Featured image credit: edited from freepik