Philippines Rising: Leading the Digital Wallet Revolution

The Philippines has made impressive strides in the digital transformation of its payments landscape over the last decade. Home to over 119 million people, the nation boasts the second-largest population in Southeast Asia. The economy is robust, and the GDP is expected to grow 6 percent in 2024. 

Driven by the Philippine government’s Financial Inclusion Steering Committee, digital payments surged from 1 percent in 2013 to 20.1 percent in 2023, positioning the country as a fast-growing payment hub in the ASEAN region. 

In this article, we’ll examine:

• Overview of the Philippines economy
• Digital payments in the Philippines
• The growing ecommerce sector
• The accelerating Real-Time payments 
• The proliferation of digital wallets in the Philippines
• Remittances

Overview of the Philippines economy

As a leading Southeast Asian economy, the Philippines boasts a dynamic business environment with a young, English-speaking workforce. Robust sectors like services, manufacturing, and agriculture drive its $471.5 billion economy.Government reforms like the Foreign Investment Act and the Retail Trade Liberalization Act have made it an attractive location for businesses, particularly for Business Process Outsourcing (BPO). This sector contributes $29.1 billion in revenue to the economy, comprising 7.5 percent of the nation’s GDP.

The country’s BPO sector has become a global leader thanks to several key factors. The Philippines literacy rate tops 99 percent, and many Filipinos are fluent English speakers making the country ideal for call centers and other outsourcing operations. Additionally, competitive labour costs and a large pool of skilled professionals contribute to the attractiveness of the Philippines as a BPO hub. 

In 2023, the Philippines’ digital economy surged to $35.4 billion, contributing 8.4 percent to the country’s GDP and up from 7.7 percent in 2022. According to a report by The Philippine Statistics Authority, this growth has been driven by various sectors: digital-enabling infrastructure and payments, e-commerce, digital media/content, and new government digital services.

Digital payments in the Philippines

The Philippines is spearheading a digital revolution with a strong focus on financial inclusion and literacy, led by their central bank, Bangko Sentral ng Pilipinas (BSP). The Paleng-QR Ph programme, launched in June 2022, enhances digital payments through the QR Ph standardised system. This initiative, along with the regulator’s encouragement for new digital wallets and alternative payment methods, has boosted the presence of fintechs and neo-banks. Salmon co-founder and chairman Pavel Fedorov credits the BSP’s unique and balanced regulatory approach for the country’s success in modernising its financial sector, emphasising its actionable vision for increasing digital payments and economic inclusion. 

Looking forward, the number of digital payment users is projected to exceed 60 million by 2027, representing more than 50 percent of the local population.

The growing ecommerce sector

The Philippines’ ecommerce market is projected to grow 19.6 percent, reaching $24.1 billion in 2024. Driving this expansion is a large, tech-savvy young population, increasing trust in online payment methods, and significant improvements in alternative payment solutions. This growth is creating a fertile environment for ecommerce to thrive, making it an integral part of the country’s digital economy.

Government initiatives like the Department of Trade and Industry’s One Town, One Product Philippines program are instrumental in this growth by encouraging small to medium-sized enterprises (SMEs) to establish and enhance their online presence. These initiatives provide SMEs with the resources to compete in the digital marketplace and drive the adoption of digital payment solutions. As competition intensifies with emerging brands like Temu and established players like Lazada and Shopee, the demand for seamless and secure digital payment methods increases, further fueling innovation and improving consumer experiences in the ecommerce sector.

Accelerating Real-Time payments 

According to an ACI Worldwide report in 2023, the Philippines saw a 24 percent year-on-year growth in real-time payments (RTPs), reaching 777 million transactions. This surge is projected to continue, with transaction volumes reaching 1.54 billion by 2028, accounting for 58.7 percent of all digital payments and a value of $209.6 billion. This shift towards a cashless economy, accelerated by the COVID-19 pandemic and existing government initiatives, is being driven by consumer demand for faster, more straightforward and more secure transactions.

With mobile wallets and bank accounts as the primary methods for initiating real-time payments, The Philippine Central Bank aims to enhance financial inclusivity and digital payments by joining the Regional Payment Connectivity initiative, linking ASEAN countries with a unified payments system. 

The proliferation of digital wallets in the Philippines

Digital wallet usage has surged over the last five years in the Philippines. With many users holding more than one account, there are estimated 258 million active digital wallet accounts in 2022, ranking the country fifth globally in digital wallet penetration, and reflecting the nation’s efforts to address financial inclusion. 

The success of digital wallets in the Philippines is further bolstered by a conducive regulatory environment and significant technological advancements. The BSP has implemented forward-thinking policies, including regulatory sandboxes for fintech innovation and clear guidelines for electronic money issuers, ensuring the integrity and security of digital financial transactions. A 73 percent smartphone penetration rate and 73.1 percent internet penetration rate have democratised access to digital financial services across the country. 

Today, digital wallet providers like GCash and Maya are addressing challenges like cyber security, interoperability and access to funds through security enhancements and user-friendly processes. These wallets are also adding more capabilities, with services like Maya’s investment products and GCash’s global services for overseas Philippine workers enhancing the local cashless experience. With digital wallets constantly evolving, The Philippines is poised for continued growth in its digital economy.

Remittances

The convenience of digital wallets also facilitates remittances from overseas workers. Remittances are a crucial part of the Philippine economy, with inflows from overseas Filipino workers playing a significant role. In 2023, total remittances to the Philippines grew 2.9 percent to approximately $33.5 billion, accounting for around 8.5 percent of the country’s GDP. With 11 percent of Filipinos working abroad in countries like the United States, Saudi Arabia, the United Arab Emirates and Canada, remittances provide vital financial support to millions of Filipino families, aiding in household expenses, education and health care.

The remittance market’s current growth is greatly supported by fintech platforms like Pomelo and other digital remittance services that offer fast, secure, and cost-effective solutions for OFWs to transfer money to their families. These platforms often feature competitive exchange rates, low fees and the convenience of mobile app transactions, which bypass traditional banking routes and reduce transfer times. Most importantly, they allow overseas Filipinos to remit funds directly to local digital wallets without leaving their wallet ecosystem. 

As digital financial services continue to evolve, they make remittances more accessible and efficient, further supporting the economic stability and growth of Filipino households reliant on these funds.

A rising star in Southeast Asia

The Philippines is swiftly emerging as a fast-growing digital payments hub in Southeast Asia, fuelled by significant advancements in its financial sector. Government initiatives, particularly from the BSP, have driven a surge in digital payments, real-time transactions and widespread adoption of digital wallets. These changes have modernised the economy and promoted financial inclusion across the nation. Strategic reforms and robust support for the business process outsourcing (BPO) sector have also strengthened the local economy.

Thunes plays a critical role in the Philippines’ payments landscape. We enable payments to Philippine bank accounts, digital wallets like Coins, GCash, GrabPay and PayMaya as well as cash pickup. The Global Thunes Network also facilitates payment acceptance via a wide variety of local payment methods including UnionPay, Wallet Bank of the Philippine Islands, Coins.ph, GCash, PayMaya, Shopeepay and bank transfers. 

We operate across 130+ countries, supporting over 80 currencies and 330 digital wallets worldwide. Contact us to learn how you can leverage payments in the Philippines to supercharge your business growth.s growth.