Impact of the Philippines' cashless policy on the market

The Philippines' cashless policies (e.g., the Digital Payments Transformation Roadmap and the e-money initiative promoted by the central bank) are significantly changing its market ecosystem, with the following key impacts:

1. Increased financial inclusion

  • Popularisation of bank accounts: Low coverage of traditional banking services (only about 51% adults have accounts), but proliferation of e-wallet users (e.g. over 55 million GCash users). Cashless payments allow people in remote areas to participate in financial services via mobile phones.
  • Micro and small enterprises benefit: Small merchants reduce cash management costs through scanner payments and access digital credit (e.g. GCash's GLoan) to stimulate the grassroots economy.

2. Shifts in consumer behaviour and business models

  • Retail Transformation: Convenience shop chains (7-Eleven) and large shopping malls have fully supported cashless payment, and some stalls even refuse to accept cash to avoid the risk of counterfeit money.
  • Accelerated growth in e-commerce: Platforms such as Lazada and Shopee have achieved an average annual growth rate of 30%+ due to convenient payments, and new businesses such as live streaming with goods rely on real-time electronic transactions.

3. Increased efficiency of government governance

  • Accurate distribution of social benefits: During the epidemic, "Ayuda" relief was distributed through GCash/PayMaya to reduce intermediary corruption.
  • Tax transparency: The BIR (Board of Revenue) has demanded that large transactions be made electronic to track tax evasion, which is expected to increase annual tax revenues by $5%-$10%.

4. Challenges and risks

  • Infrastructure shortcomings::
    • Uneven network coverage has resulted in rural utilisation rates being only 1/3 of those in urban areas;
    • Lack of SME digitisation capacity constrains penetration.

5. Accelerated competition and innovation in the payments industry

  • Local e-wallets dominate the market: GCash (owned by Globe) and PayMaya (now Maya, owned by PLDT) hold ~801 TP3T market share but face challenges from international giants (e.g., GrabPay, Alipay cross-border partnerships).
  • Digital transformation of banks: Traditional banks have launched their own apps (e.g. BDO Pay, UnionBank Online) to compete with e-wallets for users.
  • Emerging technology applications::
    • QR code standardisation: The Central Bank promotes the harmonisation of the "QR Ph" standard to realise cross-platform code-sweeping payments;
    • Blockchain trials: UnionBank Philippines pilots blockchain-based remittance system to reduce cross-border transaction costs.

6. Safety and regulatory issues come to the fore

  • Rising risk of fraud: Cybercrime in the Philippines surges 42% in 2023, with common tactics including fake SMS phishing (GCash imitation links) and social engineering scams. The central bank requires the implementation of double authentication (2FA), but rural users have weak security awareness.
  • Data privacy controversy: The Data Privacy Act is poorly enforced, with some merchants storing user bio-information (e.g. face recognition data) in violation of the Act.

7. Macroeconomic impacts are beginning to emerge

  • Decline in cash flow:: Demand for banknotes has declined by 8% per annum since 2020, but coins are still used for micro-transactions; the central bank plans to launch a pilot "digital peso" (CBDC).
  • Foreign exchange facilitation: Overseas labour remittances account for about 10% of GDP, and cashless channels reduce fees from 5% to 1%-2% (e.g., WorldRemit to GCash).

8. Barriers to socio-cultural adaptation

  • Exclusion of older groups: Only 15% over the age of 60 use electronic payments, relying on their children to do so on their behalf.
  • cash inertia residue (CIR):: Micro businesses, such as "Sari-sari" grocery shops, are still predominantly cash-based due to customer habits.

Forecast of future trends

  1. Policy enhancement : Possible legislation to mandate paperless utility bill payments;
  2. Scene Deepening : Expansion in transport (Jeepney Bus Scanner Payment Pilot);
  3. Financial Inclusion Breakthrough : Buy Now Pay Later (BNPL) model based on credit payments or reaching low-wage earners.

The cashless transition in the Philippines requires a continuous balancing act between efficiency gains and social equity - both in bridging the digital divide and in guarding against capital monopolies and technological risks. (End)

9. Impact on and transformation of traditional financial institutions

  • Shrinking of bank branches: With the spread of digital payments, large Philippine banks (e.g., BPI, Metrobank) are gradually reducing the number of physical branches and moving to a lighter "smart counter" model.
  • Innovations in credit assessment: E-wallet transaction data is being used as a substitute for traditional credit (e.g. GCash's "GGives" provides instalment loans based on users' payment history), forcing banks to reform their risk control models.

10. Cross-border payments and regional financial integration

  • ASEAN Connectivity: The Philippines has joined the ASEAN QR Code Payment Alliance (QRIS), enabling cross-border code-scanning payments with Indonesia and Malaysia to promote the facilitation of tourism consumption.
  • China-Philippines Cooperation PilotAlipay + GCash has opened up consumption scenarios for Chinese tourists in the Philippines, and shopping districts such as SM Mall have supported real-time RMB conversion and settlement.

11. Grey economy governance in a cashless society

  • Underground Economy Exposed: The Government will increase the detection rate of anti-money laundering cases by 271 TP3T by 2023 by tracking the flow of illegal gambling and "biker" money through electronic transactions.
  • Cryptocurrency Regulatory Contradictions: Central bank bans cryptocurrency payments but allows trading (PDAX exchange operates in compliance), some black markets still use USDT to circumvent surveillance.

12. Disputed environmental and social benefits

  • carbon reduction hypothesis : Theoretical reduction in fuel consumption for ATM vans, partially offset by a surge in power consumption in data centres;
  • The new problem of plastic waste : The promotion of physical cards attached to electronic payments (e.g., PayMaya Visa cards) has led to increased contamination of discarded cards.

13. Extreme scenario vulnerability exposure