Government officials and business leaders believe that digital payments or e-payments will “bring economic growth and create a more inclusive Philippines.”

This was revealed during the virtual dialogue “Advancing E-Payments via Public-Private Partnership” hosted by the Makati Business Club (MBC) and the United States Agency for International Development’s (USAID) through its “E-PESO Project,” which gathered 13 business organizations.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno presented BSP’s “Digital Payments Transformation Roadmap 2020-2023, highlighting the strengthening of customers’ preference for digital payments, and having more available digital financial products and services as strategic objectives.

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The Philippines’ central bank aims to convert 50% of the total volume of retail payments and expand the proportion of Filipinos with access to financial services to 70%. It also hopes to create more available innovative digital financial services that will enable the national ID system and the modernization of payment systems.

“The path toward digital transformation is an uphill journey,” said Diokno. “Each step requires collaborative engagement among stakeholders.

The Philippines is a founding member of the Better Than Cash Alliance (BTCA), a global partnership of 75 governments, companies, and international organizations that aims to accelerate the transition from cash to digital payments to reduce poverty.

Despite its commitment, the Philippines still has a long way to go in terms of adopting a fully digital economy.

Dr. Ruth Goodwin-Groen, managing director, BTCA, noted that only 2% of supplier payments are made digitally by formal businesses with most informal businesses relying solely on cash. In the private sector, she said, only 12% of salaries are paid directly to account.

“There is a huge opportunity for our business leaders in the Philippines to digitize their payments,” Goodwin-Groen said. “The end goal is to achieve more of the Sustainable Development Goals through an inclusive system that increases transparency, efficiency, and participation.”

Barriers to e-payments adoption

USAID’s “Study on E-Payments by Businesses” found that businesses experienced barriers to adoption in the areas of regulatory, behavioral, ecosystem environment, financial, and customer experience. These barriers reinforced the practice of manual exchange of documents such as invoices and receipts and issuing supplier payments through checks.

However, when strict levels of community quarantine were put in place to curb the COVID-19 pandemic, these practices were challenged due to mobility restrictions. The past few months also saw the rise of online businesses, e-payments, and funds transfer particularly for retail consumers.

Both government regulators like the BSP and business owners rode on this momentum to generate awareness and usage in digital payments. BSP, for example, ran the award-winning “Stay at Home, Use E-Payments” campaign with USAID’s assistance through its E-PESO Project to encourage businesses and individuals to shift to digital payments. The trends in digital payments during this pandemic shows that shifting to digital payments is one way to future-proof businesses amid the changing payment ecosystem.

The Department of Finance is also actively addressing these barriers with their digitization roadmap, focused on the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) to ease the compliance burdens of businesses. BIR has promoted the e-Filing of tax returns for businesses using e-Filing and Payment System and e-BIR Forms. BOC, on the other hand, is planning to shift to online payments of fees and charges.

Opportunities amid the pandemic

Jaime Augusto Zobel de Ayala, chair and CEO of Ayala Corp., expressed the importance of public and private sector partnerships in pushing the agenda of digitizing payments during the COVID-19 pandemic, where both large and small businesses were affected.

“The pandemic has been difficult for all of us, but what it has done is fundamentally change how consumers behave,” Ayala said. “It’s given a massive push to this whole digital initiative. To a certain extent we’ve all had to experiment with and make significant investments in tools to make transactions online.”

In the Ayala Group, for example, Ayala shared that they have leveraged e-payments to continue serving clients, continue providing support to employees and other stakeholders using digital platforms, and ensure the continuity of their business operations.

MBC hopes to engage more businesses closely to push them to adopt e-payment modalities to pay suppliers and employees, conduct government transactions, and transact with their customers.

“We are in this to help stakeholders with digitalization, financial inclusion, and adapting to the new normal. We look forward to helping get more private sector input and adoption and engaging with the government and other collaborators in a joint push for convenient, safe, and secure e-payments,” MBC executive director Coco Alcuaz noted.