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Expanding Fintech Services in the Philippines

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The development of contactless payment technology, which allows payments to be made without any direct or indirect human contact, is being given a big push by the fear of COVID-19 infection. In particular, digital (or online) payment has gained a lot of traction since the outbreak.

The Philippines’ central bank aims to increase the use of electronic payments to 50% of total financial transactions by 2023. Since quarantine restrictions were first imposed in March 2020, the Philippines has seen a surge in digital payments. The country’s largest provider of mobile money services reported in May 2020 that the total amount of payments through its platform had increased eightfold from the previous years.

Recently, a tech company based in Manila, which also owns one of the most popular payment and financial services apps in the Philippines, announced today that it has raised US$ 167 million in new funding to launch additional financial services, including a digital bank. This includes US$ 121 million in new funding and $ 46 million from previously committed funds. The company announced in April 2020 that it had secured up to US$ 120 million in investment commitments from a few other of the country’s largest telecoms.

In its funding announcement, the tech company said it has applied for a digital bank license with Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank. A representative for the company said the digital bank will be launched about six months after the company had secured its license.

The government of the Philippines made e-commerce and electronic payment methods a priority in efforts to boost both financial and digital inclusion throughout the country, a collection of over 7,500 islands where physical logistical challenges may be overcome with digital enhancements.

OpenGov Asia reported that payment systems will evolve as digital lifestyles increase and more people around the world become linked. Consumers, businesses, and governments all stand to gain, and the expansion of e-commerce necessitates a reliable electronic payment infrastructure.

The Philippines’ Bangko Sentral ng Pilipinas’ (BSP) recently launched its Digital Payments Transformation Roadmap 2020-2023. This roadmap charts the BSP’s current initiatives and strategy in advancing an efficient, inclusive, safe, and secure digital payments ecosystem. The end goal includes increasing the number of Filipinos with access to financial services.

COVID-19 is likely to result in a significant and long-term expansion of digital payments. To make a smooth transition to digital payments, which will be an essential part of the more digital post-COVID-19 world, Asian economies must strengthen their regulatory frameworks and invest in digital networks and infrastructure, such as those that support the use of digital IDs. Contactless payment systems require robust identification systems backed by a certification authority, dependable internet networks, and trustworthy financial services.

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’s market (not just retail and payments, but also logistics fulfilment and last-mile deliveries), could assist in transforming the Philippine’s into an e-commerce territory, opening more opportunities in the rest of Southeast Asia.

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