The buy now, pay later (BNPL) market in the Philippines is expected to play a significant role in the country’s digital economy, contributing 6.7% to the gross merchandise value (GMV) in 2024, according to UnaCash, a provider of financing solutions.
According to UnaCash, this forecast shows an increase from previous years, with BNPL’s GMV contribution recorded at 4.88% in 2023 and 4.19% in 2022. The projection is based on an analysis comparing the volume growth of the BNPL market from 2020 to 2023 with the growth rate of the Philippine digital economy during the same period.
“Our latest findings suggest that the Philippines’ BNPL market is experiencing moderate yet stable progress — affirming its growing role in spurring economic growth,” said Erwin Ocampo, product head at UnaCash. “We are witnessing a notable shift in consumer behavior where there is a consistent rise in patronage for this mode of financing.”
GMV represents the total sales volume or the value of goods and services transacted through customer-to-customer (C2C) exchange platforms. UnaCash attributes the growing contribution of BNPL to three primary channels: micro, small, and medium-sized enterprises (MSMEs), embedded finance and digital payments, and the e-commerce sector.
Digital payments
For MSMEs, BNPL has emerged as a favored payment model, boosting online and offline retailers’ competitiveness. As the Philippine economy is predominantly made up of MSMEs, this adoption is contributing to the broader digital economy.
With digital payments, BNPL is enhancing consumer trust in online financial transactions. Filipinos are increasingly viewing BNPL as a reliable method for managing finances, leading to the continued expansion of digital payments. This trend is expected to have a cascading effect on the digital economy.
E-commerce
BNPL is driving up average order values and supporting the sector’s overall expansion in the e-commerce sector. The growth of e-commerce in the Philippines is closely linked with the rise of BNPL, with spending in the e-commerce segment projected to increase ninefold by 2026 compared to 2021.
Citing the Bangko Sentral ng Pilipinas, UnaCash said consumer sentiment improved in the first quarter of 2024, with less hesitancy towards big-ticket purchases. Although consumers remain cautious about rising commodity prices and their financial outlook, BNPL services offer a convenient way for Filipinos to manage their spending, particularly for large purchases.