PH digital transactions to grow despite challenges: BSP chief

MANILA – Digital transactions in the Philippines are expected to further increase as regulators and other stakeholders continue to strengthen the system and put additional safeguards to thwart financial transaction-related cyberattacks.

While the central bank has received more complaints pertaining to online banking transactions compared to those related to the use of automated teller machines (ATMs) and on credit cards, among others, since the pandemic started in 2020, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno does “not consider the lack of public confidence as a major constraint to the use of online transaction.”

“The biggest challenges in encouraging Filipinos to adopt digital payments are still financial exclusion, lack of substantial savings to put in an account, lack of awareness of the need to maintain an account and inability to meet documentary requirements to open an account, which may be used for transacting through digital channels,” he said in a virtual briefing on Monday.

Diokno said these issues are aggravated by problems with internet connectivity, which is among the primary tools needed for digital financial services.

“We have to overcome these challenges to achieve our payments digitalization and financial inclusion objectives,” he added.

The BSP aims for 70 percent of adult Filipinos to have bank accounts by 2023 as part of its digital transformation and financial inclusion bid.

As of the first quarter of 2021, Diokno said there were around 53 percent of adult Filipinos who had electronic money (e-money) accounts, higher than the 29 percent in 2019.

He also dubbed as “encouraging” the rise in the use of digital payments in the country following the hitting of the central bank’s target to have 20 percent of financial transactions in the country be done through digital mode by 2020.

The BSP also continues to introduce innovations on electronic payment systems in the country, particularly for PESONet and InstaPay, the two electronic fund transfer facilities under the central bank’s National Retail Payment System (NRPS).

On Monday, the BSP, along with the Philippine Payments Management Inc. (PPMI), launched a multi-batch settlements (MBS) facility that will increase the allowed daily transactions through PESONet.

The MBS, which became operational earlier in the day, increases to two cycles the PESONet settlements in a banking day instead of the previous one settlement at the end of the day.

“With this enhanced feature, we hope that consumers will be incentivized to use PESONet for greater convenience, faster settlement and better liquidity management,” Diokno said.

During the same briefing, BSP Deputy Governor Mamerto Tangonan underscored the continued expansion of both the PESONet and InstaPay transactions.

He said the volume of PESONet tractions rose by 26 percent year-on-year by end-2021 to seven million amounting to around PHP502 billion, up by 37 percent.

During the same period, InstaPay transactions rose by 47 percent to 45 million, amounting to PHP289 billion, higher by 64 percent compared to the end-2020.

PESONet is for bulk and recurring transactions while InstaPay is for low-value payment transactions.

Tangonan said the MBS for PESONet is expected to drive up both the volume and value of transactions.

He said when the system became live Monday morning, it already registered 99,000 transactions amounting to over PHP8 billion.

Tangonan said the transactions on Monday morning alone account for around 1.6 percent of the average monthly volume and 2.2 percent of the average monthly value in 2021.

He said the average monthly value of PESONet transfers in 2021 was around PHP380 billion.

“Based on our projections, this figure could increase by more than 50 percent as we implement the multiple batch settlement in the next 24 months,” he said, citing as a plus the rising number of financial institutions that are now part of the system.

As of end-2021, there are 94 BSP-supervised institutions that are providing PESONet services and these include thrift banks (TBs) and non-bank electronic money issuers (EMIs), he added.