BSP wants 50% of PH retail transactions done digitally by 2023 Efficient, inclusive, secure ecosystem
The central bank wants half of all retail payments in the country to be made through digital channels in three years and to get at least 70 percent of Filipinos to have electronic payment or transaction accounts within the same time frame.
These goals were set down in the Bangko Sentral ng Pilipinas’ (BSP) Digital Payments Transformation Roadmap 2020-2023 which was approved recently by the Monetary Board—a plan that charts the regulators’ current initiatives and strategy in advancing an efficient, inclusive, safe and secure digital payments ecosystem.
The second goal of the strategy is to make available more innovative digital financial products and services designed to be responsive to the needs of consumers, enabled by a digital ID like the Philippine Identification System or Philsys, and supported by the availability of a next generation payment and settlement system to facilitate real-time processing of financial transactions.
These objectives are strategically anchored on three critical pillars, which are envisaged to successfully transform the cash-heavy Philippine economy into a cash-light economy, the central bank said in a statement.
“Our thrust to promote digitalization of payments is also strategically geared toward furthering financial inclusion as we view the two to be mutually reinforcing: They go hand in hand, with each one enabling the other,” BSP Gov. Benjamin Diokno said.
The first stage of the plan calls for the development of digital payment streams which will accelerate wider acceptance and use among individuals, businesses and the government.
The second stage includes the establishment of the necessary digital finance infrastructure to facilitate interoperability in the digital payments ecosystem, allowing providers to offer a wider array of affordable products and services.
Finally, the third stage is the implementation of digital governance standards that will safeguard the integrity and privacy of consumer data, and ensure appropriate governance and regulation of digital products and services.
The roadmap also recognized the broader challenges to the development of a digital payment ecosystem and financial inclusion, key among which is the state of access to and quality of internet connectivity.
This challenge may be addressed by exploring the use of satellite communications technology in delivering internet connectivity to hard-to-reach rural places.
“With the launch of the Digital Payments Transformation Roadmap, we aim to hit two birds with one stone,” Diokno said. “We are securing the digitalization of payments, and increasing the number of Filipinos with access to financial services.”
The shift to digital payments was given greater impetus in recent months by recent lockdowns brought about by the COVID-19 pandemic.
Comparing data from early March 2020 and during the nearly nationwide quarantine from mid-march to the end of May 2020, a significant decline in the volume and value of check payments and automated teller machine withdrawals was observed, suggesting that consumers are wary of the risk of exposure brought about by face-to-face transactions in the bank.
Meanwhile, PESONET and Instapay transactions increased by 74 percent, from 18.4 million prior to the COVID-19 lockdown to 32.1 million during the enhanced community quarantine period. At the same time, the 2019 financial inclusion survey showed an increase in the number of e-money account owners from 1.3 percent of the adult population in 2017, to 8 percent in 2019.