The Philippines is prime for a digital revolution: the World Bank says 67 million Filipinos are Internet users, spending an average of 3 hours and 57 minutes a day on social media. The country’s e-commerce platforms are also growing, boasting a total revenue of PHP42.7 billion in 2018.
Amidst this digital boom is the growing importance of financial technology. E-Money—which the country’s Central Bank defines as “fiat money digitally stored in an electronic account”—has seen steady growth over the past few years, with 8% annual growth in volume from 2014 to 2018. This number is projected to grow even more with the COVID-19 pandemic forcing the adoption of cashless transactions.
Alongside this shift is the Bangko Sentral ng Pilipinas (BSP) advocating for e-money as the driver towards financial inclusion for the country’s underbanked. This is studied in the white paper The Digitalization of the Philippine Wallet: E-Money’s Emergence in the Philippines by YCP Solidiance, along with the future of the country’s most popular e-money platforms.
Non-traditional banking gains traction
Digitizing traditional banking has been a winning strategy for the players who made the first move in the Philippines’ emerging fintech market. Currently, nine out of the top 10 banks in the country have fully functional mobile apps or online banking platforms. Digital banks like CIMB and ING are also capturing attention as an alternative to traditional brick-and-mortar banking with their high-interest savings accounts.
Aside from encouraging online transactions, the top banks in the country are also promoting the use of prepaid cards as an alternate to traditional credit. RCBC and BDO, two of the country’s premier banks, are leading the pack as the most used prepaid cards in transactional volumes, with other players not far behind.
The popularity of mobile wallets
Prepaid cards may be gaining popularity, but mobile wallets are the primary driver of fintech growth in the Philippines. As with digital banking, being first on the market drives leadership in the segment. Three players—GCash, PayMaya, and Coins.ph—are the market leaders due to their early adoption of e-money and strong backing from large investment players. GCash, who entered the market in 2012 and was the pioneer in e-money for the country in many ways, has an investment from Ant Financial and employs strong marketing campaigns communicating the ease and efficiency of their product.
The competitive landscape for mobile wallets is continuing to expand with other players looking to grab market share. GrabPay, an offshoot of the popular ride-hailing app’s cashless feature, is also expanding with new capabilities, and other smaller players are gearing up to introduce new options for Filipinos.
Opportunities for growth
The digitalization of the Philippine wallet is poised to continue its steady growth in the country. More than PHP370 billion is projected to be transacted via e-money methods in 2021, with wallet inflow reaching almost PHP700 billion.
Opportunities are also growing in the sector, as the BSP’s push for financial inclusion finds new collaborators to bring more Filipinos into the digital wallet ecosystem. The rapidly shifting digital landscape also presents more opportunities—traditional banks need to improve their offerings, and mobile wallets beefing up their capabilities to go beyond just traditional transactions invites more competition to join the fray.
To study a detailed breakdown of how e-money is steadily changing the Philippines’ financial landscape, as well as its implications on your business, download our full report HERE.