PH fintech boom deemed ‘shallow’ as costs stay high
Weak financial infrastructure risks keeping fintech usage in the Philippines shallow and transaction costs elevated, despite the rapid expansion of e-wallets and other digital payment platforms, according to a report by local venture capital firm Kaya Founders.
In its “The Philippine Fintech Stack” report released on Monday, the firm noted that e-wallets now serve more than 70 million users, while InstaPay transaction volumes more than tripled between 2024 and 2025, rising to 4.6 billion from about 1.4 billion.
Yet these figures remain “modest” compared with global peers in terms of usage, the report said.
InstaPay averages just three transactions per person per month.
By comparison, India’s Unified Payments Interface (UPI) logs about 14 transactions per person monthly and has surpassed 250 billion transactions annually, while Brazil’s Pix averages 25 monthly transactions per person.
“When real-time payments are costly, rigid, and inconsistently interoperable, users and merchants limit usage to basic transfers,” the report said. “Until rails support cheaper, richer flows—subscriptions, B2B settlement, automation—payments will scale in volume without transforming commerce.”
Kaya said high transaction fees play a part in this gap, as InstaPay can charge consumers P10 to P25 per transaction, while PESONet can charge as much as P50.
By comparison, India’s UPI and Brazil’s Pix operate at roughly P0 to P0.50 per transaction.
Filipinos abandoning banks
The report said the rapid adoption of e-wallets had not translated into deeper participation in the formal banking system.
Even as fintech usage expanded, the share of Filipino adults with accounts at regulated banks fell to 34 percent in 2024 from 46 percent in 2021.
Kaya said this points to a shift away from traditional bank accounts, which are typically used to build creditworthiness and access larger loans, savings and investment products.
“While tens of millions of Filipinos use e-money wallets, formal bank account penetration remains far lower,” the report said. “The result is a familiar paradox: a population that is digitally active, yet financially shallow.”
“In fact, the data suggests that Filipinos are abandoning their bank accounts in favor of e-money, with transaction account utility seemingly shifting to payments from savings,” it continued.
Connor Wen, author of the report, said the constraint is no longer demand but the infrastructure supporting it.
“Digital finance in the Philippines has reached meaningful scale. The constraint now is not innovation at the app layer, but coordination at the infrastructure layer,” Wen said.
