Digital payments post steady increase

Digital payments in the Philippines posted steady growth last year, making up almost 60% of both the volume and value of total monthly retail transactions, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.

The BSP’s 2024 Status of Digital Payments in the Philippines report released on Monday showed that the share of online payments in monthly retail transactions stood at 57.4% in terms of volume and 59% in value terms in 2024.

These are up from 52.8% and 55.3%, respectively, in 2023. The BSP said in its report that these were also higher than the 2024 target of 52-54% for digital payments set under the Philippine Development Plan 2023-2028.

“This steady year-on-year growth reinforces the momentum built after surpassing the 2023 digitalization target of 50% for volume,” the central bank said.

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

“Beyond these headline figure lies our deeper challenge to ensure that digital payments are not just adopt but be integrated into the daily lives of every Filipino. We envision a future where digital becomes the default, not only because it is mandated but because the end users see real value in its convenience, security and the feeling of empowerment,” BSP Deputy Governor for the Payments and Currency Management Sector Mamerto E. Tangonan said in his own message.

Last year, the volume of digital payments was at 3.307 billion, higher than the 2.45 billion in non-digital transactions.

Meanwhile, the value of online transactions stood at USD 135.95 billion, more than the USD 94.54 billion in non-digital payments.

“Consistent with the previous year, merchant payments, person-to-person (P2P) transfers, and business-to-business (B2B) supplier payments remained key contributors to growth in digital payments,” the BSP said, with these three use cases collectively accounting for 93.2% of the total volume of digital transactions, equivalent to 3.082 billion transactions.

Merchant payments made up 66.4% or 2.196 billion of the monthly digital payment volume, up 29.1% year on year. In terms of value, merchant payments were at USD 28.8 billion.

P2P transfers comprised 20.6% of the total with 680.5 million digital transactions (worth USD 47.8 billion), rising by 34.7% from the prior year, which the central bank said was driven by broader access to transaction accounts.

Lastly, B2B or supplier payments had a 6.2% share with 205 million transactions (valued at USD 28.6 billion), up 28.1% year on year. The BSP said this reflects the impact of its digitalization initiatives in the business sector.

“The growing adoption of these contributors is evident through the increasing use of QR Ph P2M, InstaPay, and PESONet. More BSP-supervised institutions are joining QR Ph P2M, making it easier for Filipinos to pay by simply scanning or uploading QR codes at merchants nationwide,” the central bank said, noting that the number of merchants accepting QR Ph grew by 148.7% year on year in 2024.

“InstaPay also saw significant growth, with a 67.8% rise in transaction volume and 46.3% in value from 2023 to 2024, highlighting its popularity for fast, low-value P2P transfers. Meanwhile, the expansion of PESONet transactions, supported by the addition of a third daily settlement cycle in July 2024, has further boosted digital supplier payments, enhancing the efficiency of business transactions,” the BSP added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the increased use of e-wallets as consumers prefer more convenient payment options has also helped drive the rise in online transactions.

“E-wallets have also been integrated with online banking apps, further reducing the need to have cash or coins,” he said. “Furthermore, this also reflects the continued growth and increased adaptation of online business transactions, as well as increased use of delivery services, TNVS (transportation network vehicle service), and other online solutions that also make digital transactions more convenient.”

“The pandemic-induced shift in consumer behavior also had a lasting effect, with more Filipinos now preferring the convenience and safety of cashless transactions,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera added said in a Viber message.

Mr. Rivera said expanded merchant adoption of digital payment platforms and strong public-private collaboration through initiatives like QR Ph and the BSP’s Paleng-QR Ph program has propelled the growth of online transactions in the Philippines.

“This year, digital payments will likely continue to grow, fueled by the rollout of the National ID, expansion of digital infrastructure in rural areas, and stronger trust in fintech (financial technology) platforms. Continued BSP initiatives under the Digital Payments Transformation Roadmap will also play a key role in pushing usage toward the 70% target for retail transactions,” he said.

Mr. Ricafort added that digital transactions will likely continue to grow as financial literacy improves and amid rising incomes and savings.

“The BSP continues to pursue its vision of harnessing technology and finance not only to connect markets but also to ensure that every Filipino becomes part of the formal financial system,” Mr. Remolona said.

“In this light, we aim to foster an environment that empowers our regulated entities and fintech partners to leverage innovation in designing financial products that are not only accessible but also more responsive to the needs of consumers.”

Mr. Tangonan said the BSP will continue to support initiatives to advance innovation in the digital payments space while reinforcing safeguards against risks. “Ultimately, we want to ensure that progress does not come at the cost of consumer protection or systemic stability.”

These initiatives include Project Nexus, through which the Philippines, with India, Malaysia, Singapore and Thailand are working to establish a multilateral network to link their payment systems for cross-border transactions.

“We likewise aspire for a national retail payment system where one account is sufficient to meet all payment needs of a person in a secure and convenient manner, as supported by the full interoperability across BSP-supervised institutions’ platforms. This is more than just infrastructure; it is a blueprint of digital finance that is unified, intuitive, and centered around diverse payments needs,” Mr. Tangonan said.

The BSP is also pursuing policy initiatives related to designated payment system operators, clearing switch operations, and “reasonable” electronic fund transfer fees to make digital payments more affordable, accessible and attractive for consumers.

“The objective is to empower more users to participate in the digital economy, enhance financial inclusion, and drive economic growth,” the central bank said.

The BSP is targeting to achieve a 60-70% share of digital payments over total retail payments volume by 2028, in line with the Philippine Development Plan. — Aaron Michael C. Sy