How high is e-wallet penetration in the Philippines?2024 Latest Data Analysis

Overview of the Philippine eWallet Market

In recent years, the Philippines has experienced unprecedented growth in the e-payments industry. As one of the fastest growing digital economies in Southeast Asia, e-wallet penetration in the Philippines continues to climb. According to the latest market research data, the percentage of Filipino adults who have used an e-wallet has reached 671 TP3T by the end of 2023, almost doubling from 351 TP3T in 2019.

This rapid growth has been fuelled by several key factors: increased smartphone penetration (currently around 75%), improved internet infrastructure and a boost in contactless payments during the New Crown epidemic. Among the many mobile payment platforms, GCash and PayMaya (now renamed Maya) dominate, with a combined market share of more than 80%.

Notably, while usage is higher in urban areas (reaching 821 TP3T in Metro Manila), rural areas are growing at a faster rate (281 TP3T per annum), showing great potential for growth. As fintech companies continue to introduce products and services that cater to different income groups, the national average penetration rate is expected to surpass 751 TP3T by 2025.

Key drivers affecting penetration

Smartphone penetrationis the primary factor driving the use of e-wallets in the Philippines. According to statistical agencies, the country has reached around 85 million smartphone users in 2023 (781 TP3T of the total population) and is still growing at a rate of 8-101 TP3T per year." Mobile first" has become a key feature of local consumer behaviour.

Government policies are crucial to the enhancement ofFinancial inclusionplayed an important role.The Digital Payments Transformation Roadmap launched by the Bangko Sentral ng Pilipinas (BSP) explicitly sets the goal of digitising 50% retail transactions by 2023 (already achieved) and plans for the 70% adult population to have a formal bank account or an e-money account by 2030.The BSP has also launched a Digital Payments Transformation Roadmap, which will help the government to achieve the goal of digitising 50% retail transactions by 2023 (already achieved).

Young demographics have also accelerated the rate of adoption - the 15-34 year old group, which makes up 36% of the population, is more willing to try out new technological services; while the demand for remittances from overseas workers has spurred the development of relevant application scenarios - World Bank data shows that every year World Bank data shows that about 25%-30% of the more than US$36 billion remitted through formal channels are beginning to shift to digital channels for processing.

Of note is the significant increase in merchant acceptance: more than 1.5 million merchants, from traditional food markets (sari-sari stores) to supermarket chains, support mainstream e-wallet payment methods; and 72% (BSP survey data) of users who have maintained their spending habits since the outbreak say they will continue to use mobile payment tools to complete transactions even if offline shopping resumes.

Competitive Market Landscape of GCash and Maya

In a highly competitive market, the GCash operator Mynt(a joint venture between Globe Telecom and Ant Group) has taken the lead by virtue of its first-mover advantage - the number of active users has exceeded 76 million (equivalent to 71.6% nationwide), and the average daily transaction volume has reached more than 18 million. The key to its success lies in the construction of a complete ecosystem: in addition to the basic money transfer function, it also integrates value-added services such as investment (GInvest), credit (GCredit), insurance, etc.; particularly noteworthy is that it solves the problem of the "last kilometre" through the establishment of a large network of cash reloading and withdrawing cash through the cooperation of 7-Eleven and other convenience stores.

As the main challenger.Maya(Formerly PayMaya/Voyager Innovations' brand has undergone a comprehensive upgrade to show strong growth - reports show that its user base expanded by 47% in one year to reach 32 million people. Differentiation strategies include: 1) acquiring solutions focused on micro and small businesses; 2) innovative combination of digital banking and e-wallet functionality (Maya Bank); and 3) Buy Now Pay Later (BNPL) products that have gained popularity among young professionals.

Other players such as GrabPay and Coins.ph maintain a presence in niche areas: Grab uses a super-app strategy to convert its travel and takeaway customer base; Coins focuses on cryptocurrency-related services to attract a specific group of people.Digital banks such as Tonik and UNOBank are also attempting to compete for market share through high-yield savings accounts, but overall their impact is limited. Digital banks such as Tonik and UNOBank are also trying to compete for market share through high-yield savings accounts, but their overall influence remains limited.

New entrants face high barriers - Apart from regulatory clearances (apart from the tightly controlled number of EMI licences issued by the BSP), the cost of customer acquisition has risen to15-20/person range and retention has become a problem: the industry average next-month retention rate of 61%, lower than the level of Indonesia and Vietnam, indicating that there is still room for improvement in service quality.

Forecast and analysis of future development trends

Technology convergence will be a core driver for the next phase of development - 40%-45 per cent of transactions are expected to be completed through biometric authentication without the need for passwords by the end of 2025; and the application of blockchain technology may reduce the cost of cross-border remittances to less than one-third of the traditional method, thus further expanding the user base. Deployment of AI customer service systems is helping to address the support challenges posed by linguistic diversity - the Philippine Pavilion has more than 180 dialects to cover.

The regulatory environment will continue to evolve - The BSP has revealed plans to shift its focus from simply promoting innovation to improving the risk management framework by 1) implementing stricter KYC rules to prevent money laundering 2) establishing a consumer dispute resolution mechanism and 3) potentially introducing open banking standards to promote interoperability. These measures are conducive to the healthy development of the industry in the long term but may also inhibit certain aggressive expansion strategies in the short term.

The evolution of business models is noteworthy - most platforms currently rely on transaction fees as their main source of revenue, but as the market matures subscription-based value-added services and data realisation avenues will be explored, such as GCash's recently launched Premium Membership, which offers exclusive benefits and higher transfer limits. Correspondent banking, which allows deposits to be taken and loans to be made without a branch network, opens up new profit margins.

Regional Integration Brings New Opportunities - Intra-ASEAN QR Code Payment Interoperability Project Gradually Landing Enables Philippine Pavilion Visitors to Directly Use Local APP to Scan Code for Consumption in Singapore, Malaysia, etc., and Vice Versa This Seamless Experience Will Further Strengthen Stickiness of Usage It's Estimated that Cross-Border Scenarios Can Contribute to the Next Three Years' Incremental User Base of 121 TP3T-151 TP3T.

Analysis of e-wallet user profiles and usage behaviour in the Philippines

Typical User Characteristics

E-wallet users in the Philippines show a significantRejuvenation features, the data showed that the 18-35 age group accounted for 631 TP3T of the total users, and this age group was also the most active, with an average of 11.2 transactions per month. In terms of geographic distribution, Metro Manila (NCR) accounted for a whopping 421 TP3T of users, but the Visayas and Mindanao regions grew faster, with annual growth rates of 391 TP3T and 341 TP3T, respectively.

There is an "hourglass" distribution in terms of income levels - the middle class with monthly incomes of 15,000-30,000 pesos (approximately US$270-540) account for 38%, while grassroots workers with monthly incomes of less than 10,000 pesos account for 41%. It is worth noting that the proportion of female users is slightly higher than that of men (53% vs. 47%), and the average transaction value of female users is 17% higher than that of men. vs. 47%) and the average transaction amount of female users is 17% higher than that of men.

High-frequency use scenarios

Daily consumption payment is still the core application scenario:
- retail shopping:: Users of 62% use the e-wallet at least 3 times a week to make purchases at small shops
- Bill Payment: Payment of utility grid fees accounted for 231 TP3T of all transactions
- public transport: Jeepney, metro and other scenes with code-sweeping payment penetration rate of 51%
- Social transfersThe "Red Packet" function can reach a peak of 5 million transactions in a single day during the festive season.

Significant growth in emerging applications:

• Paid online education: 217% year-on-year growth in 2023
• Payment for medical services: Access to over 1,200 clinics and hospitals
• microinvestment: GCash's GInvest feature attracts 2 million users to try fund products

Challenges and development bottlenecks

Infrastructure constraints

Despite its rapid growth, the Philippine e-wallet still faces multiple challenges. Uneven internet coverage is the primary obstacle - the national average mobile data download speed is only 25.6 Mbps (ranked 86th globally) and 4G signal coverage in remote island areas is less than 601 TP3 T. This has resulted in about 191 TP3 T of transactions failing or being delayed due to network issues.

The culture of cash dependency is still deeply entrenched - the BSP survey revealed that 43% of adults still cite "greater trust in coins" as the number one reason for not using an e-wallet. The "digital divide" is particularly pronounced in rural areas - with only 28% of over-55s using e-wallets, well below the national average.

Security and fraud

Cybersecurity threats are increasingly serious:
→ SIM Swap Fraud Cases Surge in 2023 78%
→ Damage from phishing attacks estimated at 230 million pesos/quarter
→ GCash report shows it intercepts over 500,000 anomalous login attempts per day

Regulatory responses include:
✓ BSP enforces two-factor authentication standards
✓ EMIs asked to boost anti-fraud investment to 5%-7% of revenue
✓ "Cooling-off Period" (Cooling-off Period) should be applied to large transfers

Continuing Impact and Directions for Innovation in the Post COVID Era

Epidemic accelerated digitisation and left lasting change - even if offline commerce fully recovers there are still 68%(BSP data suggesting that consumers say they will maintain the contactless payment habits they developed during the epidemic; of particular interest is the freelance and micro and small business owner segment - 83% of whom are now using mobile cash collection tools to Managing business cash flow has grown by leaps and bounds from 31 per cent in 2019 .

Technological innovations are reshaping the boundaries of the experience - AI-powered voice-recognition payments are starting to support major dialects such as Tagalog and Cebuano; computer vision technology is making it possible to compare prices online by taking a picture of a product's barcode; and edge-computing solutions are helping to solve the problem of synchronising offline transactions in areas where the network is unstable. These advances are expected to reduce the hands-on time for first-time users from the current average of 22 minutes to less than 8 minutes in the next two years.

Integrate sustainability into product design - leading platforms have launched carbon footprint tracking features to show the reduced environmental impact of each digital payment compared to cash transactions; some service providers have started to charge a surcharge for users who opt for paper receipts in order to promote a fully digital process; GCash has even developed a mechanism to reward users with reward points for environmentally friendly behaviours (such as walking to accumulate steps); and GCash has developed an eco-responsibility mechanism that allows users to use their own eco-payments for social responsibility. GCash has even developed a gamification mechanism that uses environmentally friendly behaviours (such as walking to accumulate reward points) to increase user stickiness and promote social responsibility.

Cross-border Payments and Internationalisation of e-Wallets in the Philippines

Progress in regional payments connectivity

The integration of e-wallets in the Philippines is acceleratingASEAN financial integrationprocess.2023 In November, the Philippines officially joined the ASEAN QR Code Payment (QR Ph) system, enabling cross-border scanner payment interoperability with Singapore, Malaysia, and Thailand. Data shows that within six months of the system going live:

• Cross-border transaction volume grew by an average of 47% per month
• The average amount of a single transaction was 2,350 pesos (approximately US$ 42)
• The most popular scenarios, in order of prevalence, are travel and consumption (581 TP3T), cross-border e-commerce (231 TP3T) and labour remittances (191 TP3T)

Both GCash and Maya are connected to the network, allowing users to pay directly with their home country's e-wallets at over 1.2 million merchants in participating countries. This breakthrough is expected to push the size of offshore digital payments by Filipinos to over $850 million in 2024.

Digitising remittances from overseas workers

As one of the world's leading exporters of labour, the Philippines annually receives a large number ofOverseas remittanceamounting to $40bn in size. Traditionally these funds have flowed mainly through channels such as Western Union, with fees as high as 5-7%. eWallet platforms are now changing the landscape:

- GCash international money transfer feature is connected to 34 countries worldwide
- Maya partners with Alipay for real-time transfers between China and the Philippines
- Digital Wallet-to-Wallet cross-border transfer costs drop to under 1.5%

According to the BSP, the share of funds sent through formal digital channels jumps from 12% in 2019 to 29% in 2023, and is projected to reach 40% in 2025. of particular note is the rise of the "micro-remittance" phenomenon - frequent small transfers of less than $200 per transaction - which accounts for 61% of the total. The rise of "micro-remittances" - frequent small transfers of less than $200 per transaction - accounts for 61% of the total, which is where e-wallets have the most advantageous service area.

Evolution of the regulatory environment and policy support

BSP's digital finance strategy

The Digital Payments Transformation Roadmap implemented by Bangko Sentral ng Pilipinas (BSP) has entered its second phase (2024-2026), with a focus on:

✓ Open Banking Framework: Require financial institutions to share data through APIs
✓ Tiered KYC system: Implement differentiated validation criteria based on account limits
✓ interoperability injunction: All EMIs need to interconnect systems by 2025

The newly released Fintech Regulatory Sandbox 3.0 adds five new test areas:

1. CBDC Application Scenarios
2. DeFi Compliance Solutions
3. AI-driven credit scoring models
4. BNPL Risk Control System Validation
5. Web3 authentication mechanism

These measures encourage innovation while controlling risk - the number of new EMI licences issued over the past three years has been kept to an annual average of 2-3.

Consumer protection enhancements

In response to the fast-growing problem of complaints (mainly related to unauthorised transactions and service interruptions), the regulator launched:

→ Dispute resolution timetable: Require service providers to respond to complaints within 72 hours
→ Criteria for compensation for losses: Clarify the division of responsibilities in different contexts
→ Cooling-off period provisions: 24-hour delay for first large transfers

A nationwide financial literacy education programme was also launched - with the goal of equipping 85 per cent of the adult population with basic digital financial services knowledge, particularly fraud prevention skills, within three years. The first focus of the training includes:
- Cash-intensive industry workers such as Tricycle drivers
- Barangay community workers
- Registered member of the Overseas Workers Welfare Administration

ESG Practices and Social Impact

Assessment of the effectiveness of financial inclusion

E-wallets have significantly improved financial services accessibility indicators:

The increase in account penetration from 13 per cent to 49 per cent, especially in areas with few traditional bank branches, such as the Autonomous Region of ARMM, is due in large part to the spread of the correspondent banking model - there are now more than 270,000 sari-sari stores across the country that offer basic financial services.

Innovative attempts at "green finance"

Environmentally friendly practices of leading platforms include:

♻️ GCash launches GCarbon feature to cumulatively reduce carbon emissions equivalent to planting 870,000 trees
♻️ Maya Reduces Energy Consumption by 32% by Migrating Servers to Renewable Energy Data Centres
♻️ Coins.ph Pilots Bitcoin Lightning Network to Save 99% of Blockchain Confirmation Energy Consumption

Social projects have also been effective - for example, the Bayanihan programme, launched during the epidemic, has helped 1.5 million families to access government grants without having to gather in queues; and the recently launched AgriPay programme has connected 6,500 farmers' cooperatives to simplify losses in the middle of the chain of production and marketing.