Almost 60% of Philippine retail payments now digital

Nearly three of every five retail payment transactions in the Philippines were done digitally in 2024, smashing the government’s target for last year amid a strong regulatory push to transform the country into a cash-lite society.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed digital payments cornered 57.4 percent of the total volume of retail transactions, up by 4.6 percentage points from the 2023 ratio of 52.8 percent.

Such a result surpassed the government’s 2024 goal to convert 52 to 54 percent of retail transactions to digital. In terms of value, total monthly digital payments reached $136 billion last year, accounting for 59 percent of the nation’s overall retail transaction value.

“These figures reflect the continued shift toward digital channels and the growing trust of Filipinos in using digital financial services,” BSP Governor Eli Remolona Jr. said.

“We continue to promote enabling technologies, such as interoperable payment systems, e-wallets and mobile banking platforms, which serve as bridges to greater financial inclusion,” Remolona added.

According to the Bank of International Settlements, a 1 percentage point increase in digital payments use is associated with 0.10 percentage point growth in gross domestic product per capita and 0.06 percentage point decline in informal employment.

Dissecting the BSP’s report, 97.2 percent of transactions made by the government were done via digital channels, the most cash-lite among the three primary payment use-cases that the central bank tracks. The BSP said almost 100 percent of payments made by the state—including capital transfers to municipalities, procurements, payroll and cash transfers to the poor—were done electronically.

Meanwhile, the share of digital payments made by individuals rose to 72.2 percent. The BSP said this was accompanied by a decline in the proportion of cash payments.

Over the past years, the central bank said payments collected by businesses from customers have been the main driver of retail digital payments. Figures showed the share of merchant payments that were done via electronic platforms had grown to 66.4 percent last year.

Person-to-person electronic fund transfers had the second-largest contribution to total digital transactions at 20.6 percent, bigger than its 2023 share of 19.3 percent. Lastly, business-to-business payments pitched in 6.2 percent to the overall volume of digital transactions—which the BSP described as “modest” growth.

BSP deputy governor Mamerto Tangonan said the regulator was working to ensure that the shift to cashless payments does not come at the cost of consumer protection or systemic stability. The next goal of the central bank is to digitalize 60 to 70 percent of retail payments in the country by 2028.

“Even as we pursue this goal, we are cognizant of the risks. Safety in payments, whether digital, physical or cross-border, is nonnegotiable,” Tangonan, head of the central bank’s payments and currency management sector, said.

“We are committed to having a regulatory environment that is vigilant, agile and informed. One that works alongside innovation, not to stifle, but to guide its responsible use,” he added.

Source: Inquirer

50.4% of Filipinos benefit from financial inclusion

But ratio lower than 51.4% in 2021, the last time that WB published its triennial report

The proportion of Filipinos with financial accounts slightly fell in 2024 compared with three years ago, the World Bank (WB) Group reported, highlighting the challenges of onboarding the rest of the population to the formal financial system.

In its Global Findex 2025 report, the Washington-based institution found that 50.2 percent of Filipinos aged 15 years old and above owned an account with banks and other regulated entities such as credit union, microfinance institution or a mobile money service provider.

This was 1.2 percentage point lower compared with the previous share of 51.4 percent back in 2021—the last time that the WB Group published its triennial report.

The latest data on financial account ownership in the Philippines were based on the results of 1,000 interviews, with a margin of error of 3.5 percent.

Underperforming vs peers

As it is, the rate of financial account ownership in the Philippines was lower than the 83.3 percent average for the East Asia & Pacific and 70.4 percent for lower-middle-income economies.

The findings of the WB Group also fell short of the goal of the Bangko Sentral ng Pilipinas to include at least 70 percent of Filipino adults in the formal financial system by 2023.

The BSP has yet to release the results of its latest financial inclusion survey.

Notably, the decline in account ownership happened even as BSP data showed that 57.4 percent of total retail transactions in the country in 2024 were cashless. This surpassed the government’s 2024 goal to convert 52 to 54 percent of retail transactions to digital.

‘Concerning’ decline

John Paolo Rivera, a senior research fellow at state-run think tank Philippine Institute for Development Studies (PIDS), said the dip in financial account ownership was “concerning” as it ran counter to the “digital gains” that the country had seen recently.

“It suggests that economic hardship, job informality and limited digital access in rural areas may have offset earlier progress. The pandemic may have pushed people to open accounts for aid or transactions, but without sustained income or digital literacy, usage and retention likely fell,” Rivera said.

WB Group data showed that among the Filipinos who own accounts, 33.5 percent were maintained with banks “or similar financial institutions.” Meanwhile, 32.7 percent of them were “digitally enabled” accounts, and 28.8 percent were mobile wallets.

This is the first time that the report included data on personal mobile phone ownership and internet use.

Technology as enabler

The report added that 23.9 percent of Filipinos saved money using formal financial accounts in 2024, up from 20.8 percent in 2021.

Globally, the WB Group said mobile phone technology played a key role in the increase in formal saving.

“Financial inclusion needs more than just access. It needs meaningful use,” PIDS’ Rivera said.

“The government and private sector must invest in financial education, rural connectivity and trust-building to bring the remaining half of Filipino adults into the system,” he added.

Source: Inquirer

Protecting every saver

How deposit insurance can be a lifeline during unforeseen circumstance.

Waking up to a home flooded up to hip level or reporting for work only to find out you have been let go by the company are scenarios one would wish were just a bad dream. For Karla and Paulo, however, this was their reality when Typhoon Ondoy and the global pandemic happened, respectively. Faced with the sudden dilemma, they found themselves asking: How do I begin again?

Emergency situations such as natural calamities and virus outbreaks strike without warning. Having a savings account — or better yet an emergency fund, can spell the difference between feeling helpless and having peace of mind.

Karla and her family lost almost all of their belongings, but thankfully the money she tucked in the bank was left unharmed. “Buti na lang may savings ako. Maliit man o malaki na sakuna, importante na ready ka, na may savings ka sa bangko para may mahuhugot ka. Hindi mo need maghintay ng tulong sa iba dahil kaya mong tulungan ang sarili mo at ang pamilya mo (It was a good thing I had my savings in a bank. Whether it is a small or big calamity, it is important that you are ready, that you have savings in the bank that you can use. That way, you won’t need to wait on others for help because you are capable of helping yourself and your family),” Karla recalled with a sense of relief.

This sense of security in the banking system is exactly what the Philippine Deposit Insurance Corporation (PDIC) aims when fulfilling its twin public policy objectives of protecting depositors and promoting financial stability. As the state deposit insurer, the PDIC provides a financial safety net through deposit insurance to depositors of banks up to the maximum coverage amount set by law.

In Paulo’s case, his unforeseen emergency was brought about by COVID-19. The pandemic not only taught him that nothing is permanent but also stressed the importance of saving money in banks. As the family’s breadwinner, he immediately needed to find another way to earn a living after being laid off. That was when he tried delivery work.

“Dati wala akong effort para mag-ipon sa bangko. Lahat ng sinasahod ko napupunta agad sa mga bilihin at mga bayarin. Nung nawalan ako bigla ng trabaho, dun ko na realize na ang hirap pala pag wala kang naitabi. Kaya ngayon, kahit pa P10 o P20 lang na extra, kapag pinagsama-sama malaking dagdag na rin para sa emergency fund (I used to not make an effort to save in banks. What I earn went straight to buying the necessities and paying the bills. When I suddenly lost my job, that was the only time I realized just how hard it is when you have nothing saved. So now, I save even if it is just an extra P10 or P20 to add to the emergency fund),” he said.

According to a report by the Bangko Sentral ng Pilipinas (BSP), as of September 2024, more than 450 cities and municipalities in the country remain unbanked. This means that many Filipinos may still be unaware of the benefits of saving in banks and having their hard-earned money protected by the PDIC.

To sustain the protection the PDIC provides to depositors, it continuously strengthens the Deposit Insurance Fund (DIF), the funding source of deposit insurance built primarily through the collection of semi-annual assessments from banks.

Starting March 15, 2025, the DIF guarantees that deposits up to the maximum deposit insurance coverage (MDIC) of P1 million per depositor per bank are protected. This is double the previous MDIC of P500,000, which was last adjusted in 2009.

This increase in the MDIC not only demonstrates the stability of the DIF but also ensures more deposit accounts are insured, thus reinforcing public trust and confidence in the banking system. Hopefully, more individuals, like Karla and Paulo, can confidently choose to save in banks, knowing that the PDIC is their ally in safeguarding their savings and the welfare of their family during challenging times.

Source: Business World