What are the preferred payment methods for Filipinos?

The payment ecosystem in the Philippines is characterised by diversity, with traditional cash transactions co-existing with digital payments, and the following is an analysis of the mainstream local payment methods and the latest trends:

1. cash economy(Dominance)

• Approximately 60% of daily transactions are still done in cash
• Cash usage in rural areas up to 75%
• The prevalence of a culture of small change (e.g., splitting large notes into "dozens")

2. Explosive growth of e-wallets

   • GCash:
     • Passed 76 million users (2023 data)
     • Support code scanning payment, cross-border remittance (GCash Remit)
     • Added cryptocurrency trading function
   • Maya (formerly PayMaya):
     • VISA co-branded card issued over 5 million units
     • Integrated Investment Products
   • Coins.ph:
     • Web3 Payment Solution Provider
     • Support digital currency exchange such as Bitcoin

3. Innovations in bank transfers

   • InstaPay: real-time microtransfer system (50,000 pesos single transaction limit)
   • PESONet: bulk clearing system (large interbank transfers)
     Two major systems to process transactions up 42% year-on-year in 2023

4. Cross-border remittance channels
   Western Union/MoneyGram still has 351 TP3T market share, but digital channels are growing at a significant rate:
   - GCash international remittances grow at an annual rate of 1,20%
   - WorldRemit and other online platforms increase market share to 18%

5. emerging trend

• "Buy Now Pay Later" services on the rise: Atome, BillEase and other platforms reach 12% penetration rate
• CBDC Pilot: BSP plans to test wholesale digital currency in 2024
• QR Ph standard rollout: National unified QR code payment coverage has reached 65% merchants

Regulatory Update: The BSP requires all e-money issuers to hold a licence and implement strict anti-money laundering scrutiny. The share of digital payments is expected to increase from the current 42% to 50% by the end of 2024.

Overseas enterprises are advised to adopt a hybrid solution: simultaneous access to GCash/Maya + mainstream banking gateways + cash collection channels (e.g., 7-Eleven CLIQQ), and keep an eye on the Central Bank's upcoming Open Finance API framework.

In-depth analysis and strategic recommendations for the Philippine payments market (continued)

6. Digital transformation of offline payment channels

Despite the rapid growth of e-payments, a large number of consumers in the Philippines still rely on offline channels to complete digital transactions, creating a unique "O2O cash loop":

• Convenience store collection and payment network

  • 7-Eleven CLIQQ: Support GCash/Maya cash recharge, bill payment (over 500,000 transactions per day)
  • Palawan Pawnshop: Cash-to-e-wallet conversion service at 2500+ outlets nationwide

• Agent Banking

  • BDO, BPI and other banks expand services through small community shops to reach the internet banking-less population
  • Agency points processed approximately 281 TP3T of social security benefit payments in 2023

7. Credit/debit card differentiation

• Credit card penetration is only 8%(much lower than in neighbouring Southeast Asian countries), but with significant growth at the top end of the market:

  • VISA/Mastercard "zero down payment instalment" promotion with local banks (e.g. BDO's 0% instalment plan)
  • JCB Card dominates the Japanese community and travel consumer scene

• Debit card dominates online payments::

  • DragonPay and other gateways support direct debit from 500+ banks, avoiding the problem of high credit card processing fees

8. Innovative models for B2B payments

Demand on the enterprise side has spawned new solutions:

• UBX (part of UnionBank) : Provide SME APIs to interface with PESONet for bulk payments
• SquidPay : Focus on supply chain finance, integrating logistics information and dynamic settlement

9. Government-driven infrastructure upgrades

1. National ID System (PhilSys): 78 million people have been registered and will be hit in the future:

   • Real Name System for SIM Cards → Strengthening e-wallet KYC
   • Direct Benefit Transfer → in lieu of cash social benefit payments

2. QR Ph standardisation : RBI mandates all merchants to access unified QR code system by 2024

[Key challenges]

1. Digital divide issues
   - Only 321 TP3T of GCash users are from rural areas
   - Signal blindness leads to high OTP authentication failure rates

2. Rising risk of fraud
   Fintech fraud cases increased by 67% year-on-year in 2023, the main type:
   ① "Fake customer service" to induce the transfer of funds
   ② Lazada/Shopee Parcel Payout Scam

[Landing strategy for enterprises going to sea]

Note on Technology Docking::
- GCash API requires a separate application for a business account (personal accounts have a limit of 100,000 pesos/month)
- PESONet clearing window is 9AM-3PM weekdays

Future trends and strategic deepening of the Philippine payments market (continued)

10. Convergence of social e-commerce and embedded finance

Social e-commerce in the Philippines (e.g. Facebook Marketplace, TikTok Shop) is driving the "chat as payment" model:

• GCash + Messenger Integration: Users can transfer money directly in FB conversations without having to jump to an app
• Telegram Trading Bot: Local startup develops AI assistant to handle P2P micro-lending (APR 60%-120%)

11. Cryptocurrencies and the grey area of Web3 payments

Although the BSP prohibits the use of cryptocurrencies as payment instruments, there are workarounds in reality:

• Coins.ph Allows users to exchange bitcoins to GCash balance (subject to 1.5% fee)
• Chain players such as Axie Infinity settle their earnings via USDT and then cash out through informal OTC channels

Regulatory developments: The SEC has begun cracking down on unregistered crypto exchanges, but the DeFi protocol remains difficult to control.

[Payment solutions for niche industries]

(1) Game & Entertainment Industry

• Prepaid cards are preferred ::

  • Garena Shells, Razer Gold have more than 70% market share in the Internet cafe channel
  • Maya launches a "virtual card for games" (to avoid bank interception).

• Live streaming reward tiered settlement ::
  The platform splits the revenue through a third-party payment aggregator:

  graph LR
  
  Audience --> |GCash Payment| Aggregator (e.g. PayMongo)
  
  Aggregator -->|80% Split|Anchor E-Wallet
  
  Aggregator --> |20% Split|Platform Public Accounts
  
  

(2) Education Technology Sector

Private schools and international programme providers tend to use it:

• Semester instalments : Atome offers a 3 term interest free programme (default rate only 2.3%)
• Blockchain Academic Degree Deposit Fee : Some Universities Require ETH to Pay for Certificates to Upload Gas Fees

[Anti-fraud technology upgrade]

The Philippines has become a high-risk area for money-laundering in South-East Asia and is recommended for deployment:

1. biometric verification : GCash mandatory selfie + ID comparison (false positive rate 15%)
2. Behavioural analysis engine : Monitor anomalous patterns such as:
   • Frequent switching of account logins on the same device
   • GCash balance just reloaded and immediately transferred out to an unknown account

typical case:: The "operator fraud ring" uncovered in 2024 used 2,000 puppet e-wallets to transfer stolen money.

[Infrastructure investment opportunities]

1. Rural agent network expansion
   Currently there is only 1 financial service point per 100,000 rural inhabitants, which needs to be built.

   • Solar-powered mobile POS terminals (to solve the problem of unstable electricity)
   • KYC Simplified Device (supports PhilSys ID card scanning)

2. Offline payment technology
   Developed for signal blindness:

   • SMS-based transaction confirmation system
     - NFC Near Field Prepaid Card Top-up

[Ultimate strategy proposal]

In order to capture the Philippine market in depth, it is necessary to build a "cash-digital-cross-border" trinity of capabilities:

flowchart TD

    Cash Entry --> |Agents/Convenience Stores| A[eWallet]

    A --> |QR Ph/PESONet| B [Bank Account]

    B --> |SWIFT/Stablecoin| C [cross-border pooling]

Implementation steps::
① Access to GCash+Maya first to cover 75% digital users →
② Connect to DragonPay to get direct bank connection.
③ Lastly, use Thunes to open up the overseas remittance chain.