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Tech Drives Cross-Border Digital Remittances in the Philippines

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As the Philippines continues to cope with the COVID-19 pandemic, digital payments are becoming more popular. Governor Benjamin Diokno of the Bangko Sentral ng Pilipinas (BSP) recently announced that the National Retail Payment System had met its objective of increasing the percentage of digital payments to 20.1% by 2020, up from 14.1% in 2019.

The BSP also announced earlier this year that digital payments in the country increased by 5,000% during the outbreak. The BSP established the Digital Payments Transformation Roadmap in support of digital payment adoption in the Philippines, with the motive of achieving half of all financial transactions digital by 2023.

Enhancing “interconnectivity, interoperability, and financial integration” between domestic and cross-border digital payments is one of the BSP’s priorities in the roadmap. This shift in focus will continue to make quick, dependable access to funds from across the world simpler. An industry that was available and employed well before the pandemic, this shift in focus will continue to make quick, reliable access to funds from around the world easier for Filipinos.

OpenGov Asia reported that the BSP’s Digital Payments Transformation Roadmap 2020-2023 (DPTR) says that the BSP’s thrust to promote financial inclusion and digitalisation of payments is mutually reinforcing: they go together, each enabling the other. With the sudden onset of the COVID-19 global pandemic, the shift towards digital payments has become imperative as physical distancing rules become the norm under the “New Economy” environment. By using digital payments with due care and vigilance, Filipinos reduce the need for mobility and prevent health risks from face-to-face and over the counter (OTC) financial transactions. The greater usage of digital payments will also facilitate the growth of Fintech businesses engaged in e-commerce businesses as the consumption of goods and services is increasingly driven by online purchases.

The COVID-19 outbreak disrupted the lives of Filipinos not only in the Philippines but also in other countries. More consumers are realising the convenience and reliability of digital remittance and payment services as they strive to minimise their movement due to safety concerns.

The Philippines’ Country Director for an international money transfer service expects that the growing trend in digital usage would continue in both domestic and cross-border transactions. He underscored the significance of remittances as an economic component in the Philippines. For many [and an increasing number of] overseas Filipinos sending money back home, it has quickly become a digital affair both for those trying to seek a faster way to get money to loved ones and as a first-time user forced to make the transition due to COVID-19, who have since realised the value of making transactions digitally.

Simply said, transferring money online saves people time, gains more control and transparency over the transaction, and makes each transaction far more comfortable for both the sender and the receiver. As more Filipinos adopt mobile wallets, local banks strive for a larger depositor base, and various digital banking licences are granted in the Philippines, the financial sector is already experiencing rising and sustained flows towards these channels as opposed to traditional cash payments.

Cross-border payments, or financial transactions between people or businesses from other countries, accounted for UD$2 trillion in payments income in 2019, according to finance research. While the pandemic had a negative impact on cross-border currency flows, digital use for remittances continued to expand, according to the company. Such digital payments are becoming more important to regular consumers as the economy continues to globalise and e-commerce grows. Providers like the international money transfer firm enable anyone to send money internationally swiftly and securely from their devices without having to queue at a real remittance centre, and 95% of recipients receive the full amount in minutes.

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