THERE IS ROOM for growth in digital payments across cash-heavy Association of Southeast Asian Nations (ASEAN), including the Philippines, as businesses can tap underbanked consumers in markets with relatively high smartphone and internet penetration, the Hongkong and Shanghai Banking Corp. (HSBC) Global Research said on Thursday.
“While e-wallets are the most popular mode of payments in China, cash on delivery is high in certain markets like Vietnam, Philippines and Thailand,” it said in a note titled “ASEAN Next: Digital payments to triple in the next decade” released yesterday.
HSBC said online payments will reach $1.5 trillion by 2030, fueled by the members of the underbanked sector beginning to tap e-wallet services.
“With credit card penetration much lower than in developed markets, we see e-wallets playing a bigger role,” HSBC Global Research said.
In the Philippines, 53% of smartphone users do not have a credit card, which shows e-wallets can play a role to drive financial inclusion, the bank said.
This will be supported by attractive subsidies or cash back provisions, smartphone usage, and adoption of digital payments by businesses as e-commerce apps take off, it added.
In particular, it said firms in the region that could buoy the rise of e-payments include Globe Telecom, Inc., which operates e-payment app GCash that had over 20 million users as of the second quarter of 2020.
“Telecom-driven platforms are also well placed given a large distribution network which can reach unbanked or underbanked users, and due to their consumer insights,” it said.
In a high-fragmented digital payment industry, the “best positioned segments include ride-hailing apps, e-commerce and telecom-driven platforms, HSBC Global Research said.
A study by the Bangko Sentral ng Pilipinas (BSP) showed only 29% of Filipino adults had formal accounts in financial institutions as of 2019, leaving behind about 51.2 million still unbanked. By 2023, the BSP wants 70% of Filipinos to have access to a formal account. The central bank also targets to have 50% of transactions done digitally.
Online payments made up 10% of the total transaction volume as of 2018 from a mere 1% in 2013, based on a United Nations-based Better than Cash Alliance report. Digital transactions also increased to comprise 20% of the total value in 2018 from just 8% in 2013. — L.W.T. Noble
Source: Business World