Digital payments breach 40% in 2022

MANILA, Philippines — The share of digital payments to total retail transactions breached 40 percent last year from 30.3 percent in 2021 amid the efforts of monetary authorities to push digitalization, according to the Bangko Sentral ng Pilipinas.

BSP Governor Felipe Medalla said that more than 40 percent of total retail transactions are done through electronic channels due to the surge in e-wallet accounts.

“If not for the e-wallets, the increase would have been much, much smaller,” Medalla said.

As more Filipinos embraced digitalization due to mobility restrictions during the   pandemic, the share of digital payments jumped to 30.3 percent in 2021 from 20.1 percent in 2020.

The central bank was able to achieve its target of 20 percent by 2020 under the National Retail Payment System (NRPS) that paved the way for the launch of electronic fund transfers via  PESONet and  InstaPay.

Under its Digital Payments Transformation Roadmap, the BSP aims to convert half of total retail transactions to electronic channels and increase the number of banked Filipino adults to 70 percent by 2023.

The number of Filipino adults with bank accounts almost doubled to 56 percent in 2021 from 29 percent in 2019.

The BSP, supported by the International Finance Corp. (IFC) and the World Bank (WB), has officially launched the Open Finance PH Pilot, marking a milestone in the establishment of an open finance ecosystem for the Philippines to promote financial inclusion and greater collaboration among financial institutions.

With Open Finance PH, Medalla said the Philippines is taking a big step toward unlocking equal access to financial services for all Filipinos and building a cyber resilient and open digital economy.

“Enabled by strong partnerships, it’s time for all of us to embody responsible innovation, become leaders in the new era of finance, and write a new playbook for the banking system and the rest of the financial sector – one that truly won’t leave anyone behind,” Medalla said.

This initiative aims to help the unbanked, particularly those who lack documentation, build a financial profile and credit history and, over time, access loans and other services that were once out of reach.

Ndiamé Diop, director for Brunei, Malaysia, the Philippines and Thailand at the World Bank, said open finance would help the Philippines further raise the share of digital payments to total retail transactions further to 70 percent by 2028 as envisioned under the Philippine Development Plan 2023-2028.

“In many ways, open finance represents the future of financial services in which consumers benefit from financial products and services characterized by better access, enhanced quality, and increased competition,” Diop said.

The pilot of the open finance framework is a voluntary undertaking of financial institutions to co-develop an open, inter-operable and scalable ecosystem that empowers consumers to take more control over their financial data and enable them to access a range of financial products and services from different providers.