Digital payments made up 20.1% of all transactions last year, a tad higher than the 20% target by the central bank for 2020, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.
Digital payments saw its share in the total transaction volume rise by 10.1 percentage points from the 10% in 2018, Mr. Diokno said at an online briefing on Thursday.
This means one in five payments or a total of 910 million transactions last year were done online, he added.
“We are seeing an accelerated rate of increase in the usage of digital payments. This could strongly indicate that Filipino consumers are moving away from conventional cash payments toward digital payments,” Mr. Diokno said.
“While the COVID-19 pandemic may have disrupted our way of life, it also created exceptional opportunities to boost digital payments and financial inclusion in the country,” he added.
The central bank chief said payment-to-merchant and person-to-person payments grew by 47.8% and 18.1% year on year, which drove the rise in the share of digital payments.
He added that full digitalization of the payment of salaries of government employees last year likewise contributed to the higher volume of online transactions.
Meanwhile, digital transactions made up 26.8% of total transactions in terms of value last year, up by 6.8 percentage points from the 20% share seen in 2018.
Transactions done by individuals continued to have the largest share of retail payments volume at 78.1%. Those by businesses dominated high-value transactions as they made up 64.3% of the total.
“Payments made by individuals have the greatest potential for raising the share of digital payments volume. Meanwhile, payments made by businesses can accelerate growth in terms of value,” Mr. Diokno said.
Mr. Diokno said the government was the most cash-lite in 2020 as 93.2% of its payments were done digitally. This was followed by individuals (23.4%) and businesses (5.4%).
CONNECTIVITY A KEY ISSUE
The central bank said merchant payments, person-to-person payments, utility payments, supplier payments, and social benefits should be digitalized further.
“These five comprised 96.1% of total monthly retail payments in the country. We are targeting to digitalize these use cases since they have the highest potential to shift digital payments given their huge consumer base,” Mr. Diokno said.
Philippine Payments Management, Inc. General Manager Carmelita R. Araneta said there are still some issues to address in the country’s transition to a cash-lite economy, such as slow internet connectivity and cybersecurity issues, including fraud.
“[There should be] allocation of resources for technology, operations and manpower. In short, a shift from legacy systems in banks from brick-and-mortar models to digital models,” Ms. Araneta said.
The BSP wants 50% of the volume and value of payments in the country done digitally by 2023.