Most businesses believe digital payments improve financial standing
NEARLY all businesses in the Philippines believe the inclusion of digital payments in their business models improve their financial health, according to a survey by electronic payment firm Paypal Pte Ltd.
“With social media moving beyond a networking platform to a digital marketplace, the adoption of digital payments is further boosted with its ability to offer seamless payments between merchants and consumers,” Paypal said in its report titled Digital Payments: Thinking Beyond Transactions.
It noted that 88% of the surveyed merchants have turned to selling on social media, with the same number of businesses saying this helped grow their business.
“The growing trend of scommerce (social-commerce), of which digital payments is a key transaction method, has been shown to have positive effects on merchants’ financial health. For the Philippines, s- commerce is a viable opportunity for the significant rural population to tap into as a means to improve their economic well- being,” said the report.
Paypal surveyed 4,000 consumers and 1,400 merchants across seven markets in Asia: China, India, Hong Kong, Singapore, Thailand, Philippines and Indonesia. Of this total, 500 consumers and 200 merchants were from the Philippines.
The report noted that 9 in 10 Filipino consumers own at least one internet capable device, while seven out of 10 Filipinos access the Internet on a daily basis — a result not far from its Asian counterparts — signalling a strong market for digital payment schemes.
Although only 47% of consumers surveyed do not have a bank account, or less than the 87% regional average, Paypal said this does not impede digital payment adoption as the survey indicated that there are digital payment adopters who do not currently have a bank account.
PROGRESS
“The Philippines is well on its way to be a cashless nation, with 25% of consumers surveyed indicating that traditional (physical credit card, bank transfer/Internet banking, cheque etc.) and new payment methods are now their primary options,” the report said.
However, digital payment adoption in the Philippines clocked in at just 33%, the second worst rate out of the seven countries surveyed and only besting India’s 28%.
Consumer awareness of digital payments here was also the lowest in Asia, with just 35% of consumers aware of digital wallets and only a 22% actual usage.
The survey also showed that Filipinos were less aware of app payment systems at 9% with a 4% usage, digital currencies at 10% awareness and a 4% usage rate, and contactless payments via credit cards and via mobile at 14% and 13% awareness, respectively, with an actual usage of 4% and 3%.
This was said to be due to the proliferation of payment providers that led to consumers’ and merchant’s confusion, as well as its relatively complicated process.
“This shows that there are more opportunities that can be tapped into to drive awareness and see higher adoption of digital payments,” it said.
The report said that 61% of consumers and 54% of merchants agree that more payment methods mean more confusion. Meanwhile, some 55% of surveyed consumers and 43% of businesses said it is “increasingly difficult” to follow new trends in payment methods. The report also noted that 39% of consumers find processing of digital payments complicated versus the regional average of 26%.
Despite falling behind regional counterparts, the Philippines is seen to go “full speed ahead” in the cashless payment methods.
“The Philippines Government is making great strides in rallying Filipinos to adopt digital payments, including the launch of the National Retail Payments System Framework, which seeks to create a reliable electronic payment system between banks and e-money accounts. Yet, the country is only scratching the surface of what it could be.
Rahul Shinghal, PayPal’s General Manager for Southeast Asia, said in a statement, “Transparent tracking of money flow, improved transaction efficiencies, unlocking new business models and the creation of more economic channels are just a few ways digital payments drive economic opportunity for both consumers and businesses.”
“The role of digital payments is rapidly evolving. More than just a mode of transaction between sellers and buyers, digital payments has become the platform for its users to achieve better financial wellbeing and greater economic opportunity,” added Mr. Shinghal.