BSP beats digital payments volume goal in 2020

BSP beats digital payments volume goal in 2020

MANILA, Philippines — The Bangko Sentral ng Pilipinas hit its digital payments volume target in 2020, as more consumers relied on online platforms to transact amid the pandemic.

In a report released Thursday, the BSP said 20.1% of monthly payments volume are done digitally by end 2020, slightly above the BSP’s 20% goal for that year. In terms of value, digital payments grew 26.8% year-on-year in 2020 from 25% in the previous year.

“This could strongly indicate that Filipino consumers are moving from traditional cash payments to digital payments,” BSP Governor Benjamin Diokno said in an online briefing.

The BSP is targeting to convert half of retail transactions in the country to digital form by 2023.

According to a BSP report, the rise in digital payments last year was driven by “high-frequency, low value retail transactions” such as person-to-merchant payments and person-to-person payments.

Broken down, merchant payments grew by 48% year-on-year in 2020 while person-to-person payments, such as electronic transfers and remittances, rose by 18.1% annually. The full digitalization of government payroll last year also contributed to the increase in digital transactions.

The pandemic has forced Filipinos to quicken the adoption of online payment platforms and digital wallets such as GCash and Paymaya as health protocols were strictly enforced nationwide. This also helped commercial banks earn higher transaction fees, which lenders reported to be one of their highest-earning segments in past quarters.

However, slow and unreliable internet connections continue to hamper digital adoption, Diokno explained. In the 2019 BSP financial inclusion survey, weak signal or slow internet connection ranked third as reason for not using mobile phones or the internet for transactions.

“Internet connectivity is crucial foundational infrastructure to allow us to maximize the promise of digital finance,” he said.