Technical Comparison of Local and International Payments in the Philippines

The Philippine payment system exhibits clear localised and internationalised technological differences, mainly in terms of infrastructure, regulatory framework, user habits and technical standards. A comparative analysis of the key dimensions is provided below:

I. Underlying infrastructure differences

1. Local Payment Network

• Reliance on PESONet and InstaPay clearing systems regulated by Bangko Sentral ng Pilipinas (BSP)
• Transaction processing is based on the Philippine Interbank Settlement System (PIS) and supports PHP real-time settlement.
• Main access channels: GCash (mobile wallet), Dragonpay (gateway), direct bank connection

2. International Payment Gateway

• SWIFT network dominates cross-border remittances (90%+ of Filipino OFW remittances)
• Card organisations such as Visa/Mastercard use the ISO8583 messaging standard
• Emerging programme: Ripple blockchain cross-border settlement pilot project

II. Comparison of technical requirements for compliance

III. Technology stack differences

Local Features Programme:

• GCash is compatible with feature phones using the proprietary USSD protocol.
• Dragonpay supports OTC cash payments (convenience stores/pawn shops)

IV. Comparison of payment processing flows

1. Local payment processing flow (using GCash as an example)

• User-initiated transactions: Enter payee and amount via mobile app/USSD
• Risk Control Verification: Dual authentication with SIM binding + biometrics as required by BSP
• Liquidation path: bank/wallet transfers via PESONet (bulk clearing) or InstaPay (real-time settlement)
• settlement cycle: T+0 (InstaPay) or T+1 (PESONet), PHP pricing without exchange rate conversion

2. International payment processing flow (using Visa cross-border transactions as an example)

• Request for authorisation: Philippine Merchant POS Initiation → Acquirer → Visa Network → Issuer Risk Control Audit (3D Secure Verification, etc.)
• currency conversion layer:: Dynamic exchange rate calculations + FX costs for 1%-3%, involving intermediate row routing optimisation issues
• Funds pooling:: SWIFT MT103 message for final settlement, usually takes 2~5 working days

V. Analysis of key points of difference in the technical architecture

VI. Differences in penetration of emerging technologies
1. Blockchain applications:
- Local: UnionBank's PHX stablecoin trial limited to business-to-business B2B scenarios
- International: Ripple partners with SEA Bank to enable Japan-Korea → Philippines cross-border money transfers in seconds

2. AI Risk Control Adoption Rate:
-Local e-wallets still rely on Rule-based engines.
-International card organisations have deployed deep learning models to detect cross-geographic cash-outs

VII. Developer Integration Cost Comparison

# GCash API example (pre-qualification of merchants required)

headers = {"X-GCash-AppKey": "BSP_ISSUED_KEY"}

response = post("/pesonet/transfer", data={"amount":1000, "recipient": "0917XXX"})



# Stripe Internationalisation API example (standardised SDK)

charge = stripe.Charge.create(

    amount=2000, currency="usd",

    source="tok_visa", description="Cross-border"

) 

Note: Local platforms often require customised interfacing, while Stripe/PayPal etc. offer globalised SDKs

Evolutionary trend prediction:
1.Regulatory convergence: BSP plans to align AML standards to FATF by 2025, potentially driving up compliance costs for LTS providers.
2.Technology stack upgrade pressure: InstaPay is testing ISO20022 message migration and may interoperate with SWIFT cross-border standards in the future.

VIII. Comparison of Depth of Coverage of Payment Scenes

1. Advantageous scenarios for local payments

• Micro High Frequency Transactions::

  • GCash/ Maya wallet supports <500PHP (~9USD) for secret-free payments, suitable for cash economy scenarios such as food markets and tricycles.
  • Dragonpay's OTC (Over-the-Counter) model allows users to top up their e-wallets with cash at convenience stores like 7-Eleven.

• Government welfare distribution::

  • The Philippine Social Security System (SSS) issues subsidies in bulk through PESONet, with high delay tolerance but very low cost (<0.1PHP per transaction).

2. Irreplaceability of international payments

• Cross-border e-commerce settlementLazada/Shopee Philippines supports GCash, but cross-border sellers need to withdraw cash to overseas accounts via Payoneer/Wise, which involves currency conversion losses.
• The labour remittance ecosystem: OFW (Overseas Filipino Workers) relies on a tiered system of Western Union → local banks → GCash, with SWIFT intermediary bank draws of up to 5%~8%.

IX. Analysis of technological debt and innovation bottlenecks

X. Key technology conflict points for the next five years
1.Real-time cross-border vs. local compliance wall

• InstaPay attempted to expand as an ASEAN Fast Track (similar to PromptPay in Thailand), but was limited by the BSP's exchange control policy.

2.Biometric Standards Debate

• GCash uses self-developed face recognition (1% false positive rate) vs Mastercard's "Biometric Checkout" which is subject to FIDO Alliance standards.

3.CBDC impact test

• BSP plans to pilot a wholesale digital currency (CBDC) for interbank clearing, potentially marginalising the existing PESONet, while the International Card Organisation advocates a stablecoin interoperability programme.

XI. Selection recommendations for enterprises

graph LR

A [business need] --> B {Is the primary user located in the Philippines?}

B -->|Yes| C [Priority docking GCash+PESONet]

B --> |No| D [Integration of Stripe+SWIFT optimised routing]

C --> E [Note the daily transaction limit of 100,000 PHP]

D --> F [Consider Ripple to reduce Latency]

Key Decision Factors:

• Speed of arrival sensitivity: InstaPay (seconds) vs SWIFT (2 days +)
• Unbankeduser share: OTC channel coverage determines penetration in sink markets

The next step in the evolution could be around a 'hybrid architecture' - for example, Ant Group's Alipay+ solution in the Philippines accesses both GCash's local traffic and cross-border QR code interoperability via AlipayHK. This requires a technology stack that also meets the following requirements.
✅ BSP's Digital Banking Security Framework
✅ PCI DSS L3 certification
✅ ASEAN QR Universal Code Specification