The Philippines’ leading financial authorities need more Filipinos to use the digital banking method to do transactions majorly during the Luzon-wide lockdown forced by the government to prevent the spread of COVID-19.
Benjamin Diokno, a Bangko Sentral ng Pilipinas (BSP) Governor, said, “the use of e-payments during the enhanced community quarantine reduces face-to-face transactions and will prevent the spread of COVID-19.”
The BSP data states, 5 million more adult Filipinos opened accounts in microfinance institutions, banks, and e-money issuers. Thus, e-currency is gaining traction among Filipinos and is anticipated to grow at a faster pace owing to the COVID-19 pandemic situation.
Further, he added, “We can do our part in stopping the spread of COVID-19 by staying home,” thus using electronic payment services such as InstaPay and PESONet while purchasing essentials including medicines and food, paying utility bills, loans, and other purchases. However, owing to the pandemic, charges for these services have been ignored by financial institutions.
InstaPay is mainly designed for small value and urgent transactions. It allows an account holder to transfer amount up to P50,000 per day. Whereas PESONet is mainly created for high-value transactions of industries, government agencies, and other businesses. It is an electronic gateway to transfer funds using checks.
As per the data published by the central bank’s Financial Inclusion Survey (FIS), in comparison to 2017 data, the number of Filipino’s using digital banking has increased. For instance, above 20.9 million Filipino adults owned an account in either a microfinance institution, bank, or cashless systems this year.
Diokno also said electronic payments can be easily accessed by e-money issuers and account holders of banks. Moreover, individuals without an existing account can use the online onboarding services of banks.
Thus, the BSP data shows that electronic account holders increased by approximately 8.1% from 1.3%. Also, Filipinos using an account for bill payment and other payment transactions doubled to above 39% in 2019.
The BSP survey revealed the Philippines already use a major benefit of smartphone ownership to induce e-money usage. The survey states, only 12% out of 69% of adults use mobile phones for financial transactions. At the same time, only 9% out of 53% of adults use internet banking for financial transactions. Thus, the central bank said, “lack of awareness and trust are the main reasons for not making mobile or online financial transactions.”
BSP said, “All these highlight the importance of financial and digital literacy as well as adequate consumer protection in promoting uptake of digital financial services.” It further added, “Survey results showed that digital divide, or the gap in terms of smartphone ownership and access to Internet, is evident in certain demographics.”
The central bank trusts owning a financial account is the first step toward financial inclusion, thus gaining easy and direct access to credit, which is an essential element toward personal prosperity and economic activity.
As per the BSP data, the number of electronic payment transactions in the country grew from approximately 1% in 2013 to about 10% in 2018. The value of these electronic payments also increased from approximately 8% to about 20% of total transactions over the same period.
Apart from cashless systems, the number of bank account holders increased by approximately 12.2% last year, from about 11.5%. Members of microfinance institutions also went up four percentage points to approximately 12.1%.
Therefore, BSP will continue to concentrate on increasing coordination with government bureaus as well as with the private sector (fintechs and banks) to encourage acceptance of digital accounts and payments.