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E-Payments Continue to Drive the Philippine Economy Post-pandemic

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The government of the Philippines has made e-commerce and electronic payment methods a priority in efforts to boost both financial and digital inclusion throughout the country. In line with this, the Bangko Sentral ng Pilipinas (BSP) recently reaffirmed that they will continue to promote the digitalisation of financial products and services in the country even after the restrictions forced by the pandemic are lifted.

Last year, the central bank released the Digital Payments Transformation Roadmap (DPTR) for 2020-2023. Under the DPTR, the BSP aims to increase customer preference for digital payments by converting 50% of total retail payments to digital form and increasing the number of financially included Filipino adults to 70% by onboarding them to the formal financial system via payment or transaction accounts.

In an article, OpenGov Asia stated that fintech applications and technologies are constantly evolving, allowing more Filipinos to conduct financial transactions without the need for a bank account. Fintech products, such as e-wallets, allow users to transfer money digitally and build credit, making it easier for them to borrow funds in the future.

Moreover, the proposed framework for open banking by the Bangko Sentral ng Pilipinas (BSP) aims to benefit MSMEs by encouraging financial inclusion and making the deployment of innovative financial services faster and easier. With the right infrastructure, banks and fintech companies can create more cost-effective, personalised, and seamless solutions for MSMEs, facilitating distribution, data sharing, and payment enablement.

All these initiatives strive to assist BSP-supervised financial institutions’ digital transformation programmes, including fintech players, while also promoting sound risk technology and cyber risk management.

Earlier this year, the central bank and the country’s other financial regulators agreed to develop a unified monitoring and supervision scheme for the local fintech industry that does not stifle these firms’ innovative and creative ideas. To that end, a memorandum of understanding on the establishment of a cooperative oversight framework on fintech innovation was signed under the auspices of the multiagency Financial Sector Forum.

The BSP asserted that the roadmap intends to transform the country into a cash-lite society. During the pandemic, the use of digital payments reduced the need for mobility and helped to avoid health risks associated with face-to-face and over-the-counter financial transactions. The BSP stated that in the first seven months of 2021, the value of transactions made through its local E-wallets increased by more than 180%, and another by more than 80%.

Both Philippines’ leading E-wallets are automated clearing houses under the National Retail Payment System. One of the leading E-wallet platforms is a batch electronic fund transfer (EFT) that can be thought of as an electronic alternative to the paper-based check system, whereas the other leading E-wallet is a real-time, low-value EFT for transactions up to P50,000 that is useful for e-commerce.

With the rate of digitisation increasing in the Philippines, e-commerce merchants must capitalise on this shift in consumer attitudes by offering a variety of payment options along with appealing offers to attract the attention of a wide range of users. Offering multiple payment methods, including cash, and collaborating with local partners who have a thorough understanding of the Philippine market (not just retail and payments, but also logistics fulfilment and last-mile deliveries), could assist in transforming the Philippines into an e-commerce territory, opening more opportunities in the rest of Southeast Asia.

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