From 1% to 60%: The Philippine surge in digital payments
More than a decade ago, digital payments were little more than a rounding error in the Philippines—barely 1 percent of total transactions in 2013.
Then came a wave of cheap smartphones, aggressive fintechs and, eventually, a pandemic that forced even the most reluctant consumers online.
As of 2024, nearly 60 percent of all payments are done via digital channels, a remarkable leap that underscores the archipelago’s long, uneven and still unfinished march toward a cash-lite economy.
It is a transformation the Philippine Daily Inquirer has tracked step by step—and one it now mirrors itself as the country’s newspaper of record embraces its own digital reinvention.
The changes it has chronicled are visible everywhere: market vendors with QR codes taped to the fronts of plastic stalls; commuters tapping through Metro Manila’s rail lines; tiny storefronts that once relied on crumpled bills now keeping their tills alive through mobile banking apps and e-wallets.
But the first signs of electronic banking in the country appeared in the 1980s, when automated teller machines or ATMs first arrived.
Before, banks built three separate ATM consortia—Expressnet, Megalink and BancNet—that operated largely in silos.
ATM consortium
The fragmentation soon proved unwieldy, prompting lenders to open their systems to interbank withdrawals and, eventually, to merge the networks into a single ATM consortium in 2015.
As Filipinos grew more comfortable with debit and credit cards, banks deployed a wider network of point-of-sale terminals, replacing the old imprinting devices that once captured card details with a swipe of carbon paper.
But the most consequential shift came with the rise of the internet. In the early 2000s, banks began rolling out online platforms that let customers check balances, transfer funds, pay bills and even apply for loans from their desktop computers.
Those early steps laid the groundwork for an innovation that would put the Philippines on the global map: the launch of mobile money.
Smart and Globe—rivals in the local telecommunications industry—introduced Smart Padala and GCash, services aimed at reaching millions who had no access to traditional bank branches.
Their rapid adoption spurred the central bank to issue formal regulations for electronic money, creating an early framework for what would become one of the country’s most significant financial transformations.
Years later, the rise of smartphones quickened the country’s turn toward cashless payments.
As mobile phones became nearly ubiquitous, the central bank set an ambitious twin target in 2020: convert half of all retail payments into digital form and bring 70 percent of adult Filipinos into the formal financial system by 2023.
The push had a clear economic rationale. The Bank for International Settlements has found that a 1-percentage-point increase in digital payment use corresponds with a 0.10-percentage-point rise in GDP per capita and a 0.06-percentage-point drop in informal employment—gains linked to better access to credit and other basic financial services.
Then the COVID-19 pandemic struck, driving millions to open accounts to receive government aid and forcing many daily transactions online.
Retail transactions
By 2024, digital payments accounted for 57.4 percent of all retail transactions, up from 52.8 percent a year earlier—a result that exceeded the government’s target of 52 to 54 percent.
According to the BSP, 97.2 percent of transactions made by the government were done via digital channels last year, the most cash-lite among the three primary payment use-cases that the central bank tracks.
Meanwhile, the share of digital payments made by individuals rose to 72.2 percent.
At the same time, fund transfers done via InstaPay—a real-time digital payment scheme that caters to small-value transactions not exceeding P50,000—have taken over ATM withdrawals in terms of both volume and value since 2020.
The central bank’s next goal is far steeper: digitalizing 60 to 70 percent of retail payments by 2028, a target officials acknowledge will be harder to meet.
BSP Deputy Governor Mamerto Tangonan earlier said the regulator must expand the digital-payments user base by cutting transaction costs and strengthening anti-fraud safeguards—steps he said are essential to building public trust in the system.
In 2024, President Marcos signed into law Republic Act No. 12010 or the Anti-Financial Account Scamming Act, which aims to combat financial cybercrimes, safeguard the interests of financial consumers and uphold the integrity of the financial system.
“As you know, in any innovation life cycle, where we are right now, we’re over 50 percent,” Tangonan said, “The next 20 percent would equally be challenging, if not more challenging than the first 50 percent.”
The local payments industry, meanwhile, is aiming even higher. At the Manila Tech Summit earlier this year, FinTech Alliance Philippines unveiled its “80×80” vision: 80 percent of Filipino adults using digital transactional accounts and 80 percent of retail payments conducted digitally by 2028.
Looking ahead, Lito Villanueva, the alliance’s founding chairman, said the Philippine debut of Google Pay this year and the expected arrival of Apple Pay in 2026 could help propel adoption further. But he warned that lingering gaps in infrastructure remain a major hurdle.
“In most areas, we still have unreliable connectivity,” Villanueva said in an interview.
“In fairness to the BSP, they’ve done a lot of things in terms of having to provide an enabling regulatory framework,” he added.
