Digital payment solutions seen to boost small firms

Payment solutions for small businesses must be geared towards digitalization to make their transition to cashless more seamless, according to Visa.

“For small businesses, getting paid and receiving money in a safe, secure way is extremely important to their operations,” Gareth Parrington, Visa’s Head of Commercial Money Movement in South East Asia, told reporters in a roundtable interview on Wednesday.

“We’re looking to support businesses in that digitization journey and help make it more simple to accept payments, both online and face-to-face. There’s a real shift that’s taking place in the Philippines,” he added.

According to Visa’s Consumer Payment Attitudes study, one in three Filipino consumers expect that the Philippines will become a cashless society by 2030.

The study also showed card payments usage stood at 70% while mobile wallet usage was at 87%, the same as cash transactions.

“Post-pandemic, we saw a huge shift of small businesses. This is the same for the Philippines as well, moving to online,” Mr. Parrington said.

He said that small and micro businesses are looking for solutions that cater to customer usability and are simple and intuitive.

“If we think about that, a lot of the time, small businesses and their softwares and applications have been at the back of the queue. Their products and solutions may have not had the same level of investments as the consumer solutions,” he said.

“Now, we’re seeing the shift in consumerization, and our partners are starting to think about how they can really develop the user experience, make their solutions easy and intuitive.”

Mr. Parrington said small and micro businesses in the Philippines present opportunities for payment providers.

“They currently produce around 36% of GDP (gross domestic product). I think the opportunity is to grow, help businesses transact, and do business more effectively,” he said, noting that their share in economic output could go as high as 60% if they can expand their businesses.

Latest data from the Department of Trade and Industry showed 99.59% of total businesses in the country are micro, small, and medium enterprises, with 90.49% falling under microenterprises.

“The biggest need that a small business owner has is their working capital, getting money in quicker, being able to pay suppliers. Small businesses want to concentrate on their operations,” he added.

Mr. Parrington said a collective effort between the public and private sectors is needed to boost digitalization.

“It requires partnerships across the ecosystem. From a Visa perspective, anything we can do to increase acceptance and enable more businesses to become digitized helps because people then can transact in a safe way.”

The Bangko Sentral ng Pilipinas (BSP) wanted to digitize 50% of retail transactions by end-2023 and earlier said it was confident the target was met amid increasing use of online platforms for transactions.

For its part, Visa Foundation last year pledged $100 million to support small and micro businesses in Asia-Pacific Economic Cooperation countries over five years, including the Philippines.

“We’ve got a pledge in terms of digitization of small and micro businesses, that’s globally. 67 million (businesses) is how many we’re looking to digitize. We’ve passed 50 million now,” Mr. Parrington said.

“We make our investments in the products and solutions that we have, making them easier to use. Contactless payments are a big thing that we’ve rolled out in the Philippines. You’ll see from the consumer payments that we’ve noticed the growth there,” he added.

He cited various solutions to support small businesses, such as rapid seller onboarding and digital issuance of cards and credentials.

“Digital wallets and embedding credentials into mobile phones to make them more safe and secure, they’re investments that we’re making in the ecosystem that we can bring with our partners to the Philippines as well to help grow the digital landscape.”

He also cited low-hanging fruit such as the provision of a business debit card to help business owners separate their personal expenses.

“It becomes very confusing and difficult to run your bookkeeping, understand your cash flow position if you’re paying for things with your consumer cards. One of the easiest products that we have is a business debit card, so that we can start making business payments from your business bank account very simply and easily,” he added. — Luisa Maria Jacinta C. Jocson