Shifting to digital payments will bring economic growth and create a more inclusive Philippines.
This was the rallying call of government officials and private sector leaders in a virtual dialogue Advancing E-Payments via Public-Private Partnership on Wednesday, October 28.
The event, hosted by the Makati Business Club (MBC) and the United States Agency for International Development’s (USAID) through its E-PESO Project, convened 13 business organizations to encourage businesses to shift to e-payment modalities.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno discussed the government’s efforts to shift to digital payments. He presented the BSP’s Digital Payments Transformation Roadmap 2020-2023, highlighting strengthening customers’ preference for digital payments, and having more available digital financial products and services as strategic objectives.
The first objective aims to convert 50 percent of the total volume of retail payments and expand the proportion of Filipinos with access to financial services to 70 percent. The second objective aims to have more available innovative digital financial services that will enable the national ID system and the modernization of payment systems.
“The path towards digital transformation is an uphill journey. Each step requires collaborative engagement among stakeholders. Being prominent business leaders, you should spearhead the wider adoption of digital payments in the business community. The road ahead is long and bumpy. But with your unceasing support, I have no doubt that we will be able to sustain the momentum and transform our payments ecosystem into one that is safe, efficient, and reliable,” Diokno told business leaders.
Since 2012, the Philippine government has committed to increasing the use of digital payments. The country is a founding member of the Better Than Cash Alliance (BTCA), a global partnership of 75 governments, companies, and international organizations that aims to accelerate the transition from cash to digital payments to reduce poverty.
Despite its commitment, the Philippines still has a long way to go in terms of adopting a fully digital economy. BTCA Managing Director Dr. Ruth Goodwin-Groen noted that only 2 percent of supplier payments are made digitally by formal businesses with most informal businesses relying solely on cash. In the private sector, only 12 percent of salaries are paid directly to account.
“There is a huge opportunity for our business leaders in the Philippines to digitize their payments. The end goal is to achieve more of the Sustainable Development Goals through an inclusive system that increases transparency, efficiency, and participation,” Goodwin-Groen added.
In a “Study on E-Payments by Businesses” conducted by USAID, they found that businesses experienced barriers to adoption in the areas of regulatory, behavioral, ecosystem environment, financial, and customer experience. These barriers reinforced the practice of manual exchange of documents such as invoices and receipts and issuing supplier payments via checks.