The Payment Landscape in the Philippines

Sandra Smith, Executive Director Asia/Asia Pacific, recently spoke with Alvin Perez, First Vice President & Head of Retail Cash Management, Rizal Commercial Banking Corporation (RCBC) to get another perspective on the payment landscape in the Philippines.

Q: How do you see the future of cash in your country and how will this impact the ATM network in terms of growth?
A: Cash in the Philippines is still king and will still dominate the payments landscape in the near future. As the country slowly recovered, coming from the pandemic, we initially thought that cash would be replaced by digital payments, especially since the use of payment apps skyrocketed to unprecedented heights. However, the assumption that the market would continue with the digital payments migration once the Philippine economy opened did not materialize. Digital payments, though still growing, slowed down significantly, while cash payments climbed up again across all parts of the economy.

With this strong recovery of cash in the country, ATMs will still be growing in terms of deployment. Aside from bank customers, even e-wallet players in the country still see cash out options as a vital requirement of their customers, given that digital payment acceptance is still limited to metro cities in the country. Even independent ATM deployers have entered the fray, looking at ways to monetize the ATM network by partnering with banks and managing ATM fleets, or totally operating the network under a brown-label or white-label partnership. Indeed, ATMs are still here to stay as cash is still the prevalent form of payment. 

Q: What do you see as the role of cash in SE Asia and what impact have cashless payment options had upon the usage of cash?
A: SE Asia is a hybrid type of area, in relation to the payments industry. We see countries such as Singapore and Malaysia as the early adopters to digital payments with comprehensive infrastructure in place already, while other countries like the Philippines, Cambodia, Myanmar, and Laos, among others, still lagging in overall adoption. Digital payments, unfortunately, is not independent from factors that can truly influence its rise and sustainability, including technological, legal, and social aspects. In this regard, cash is both supplemental and detrimental to digital payments adoption here in SE Asia. It is supplemental as it does not curtail the payment experience of the country as it shifts its infrastructure to digitization and provides comfort, especially in areas wherein the systems that enable digital payments are not yet in place. On the other hand, it also acts as a burden of comfort due to its users not wanting to migrate and would just want to stay within what they are used to.

Overall, cashless payment options have not yet significantly impacted cash usage within the region. In specific countries, cashless payment option is prevalent already and are often the top-of-mind in payments. However, cash is still in circulation to cover certain segments within society. Currently, cashless payment options are still considered as alternatives to cash payments, with the former’s security and convenience benefits still viewed as add-ons rather than necessity, and it may still be a while before we can say that digital payments have truly impacted cash in SE Asia.

Q: What are some of the innovations you believe will drive the ongoing success of the ATM industry?
A: With the rise of digital payments inevitable, we should look at the possible synergies with digital or electronic payment players to address the still ever-present need for cash in the market. There are still segments within the market that are the last in adopting to cashless options, or may even not adopt at all, and this is where said synergies may greatly and positively impact the economy as a whole. Providing cash out options to said e-wallets and digital wallets may prove a turning point to some users who deem said providers as lockers of money without any way to move it out, outside of using it at accredited merchants. Another potential innovation would be to link up the experience of customers using digital platforms to ATMs as the fulfillment unit for other ATM-related transactions.

ATMs, as an independent hardware, will not anymore be the end-all and be-all of transactions, but if it looks at the current landscape and becomes an enabler of digitization and an extension of the digital experience, its existence can be highly justified.