10 May 2022
Posted in Banking
Alternative payments to disrupt Philippines e-commerce payments market, says GlobalData
Alternative payment tools have emerged as mainstream for e-commerce payments in the Philippines and accounted for 30.7% in total e-commerce value in 2021, with mobile and digital wallets displacing traditional payment methods like cash and cards, says GlobalData, a leading data and analytics company.
An analysis of GlobalData’s E-Commerce Payments Analytics reveals that the e-commerce market in the Philippines, which grew at a compound annual growth rate (CAGR) of 19.8% between 2017 and 2022, is expected to further grow at a CAGR of 15.8% over 2022-25 to reach PHP495.2bn (US$9.7bn) in 2025.
According to GlobalData’s 2021 financial services consumer survey*, which was carried out in Q1 and Q2 2021, the share of alternative payments in the total e-commerce payment value in the Philippines stood at 30.7% in 2021, up from 21.0% in 2017. Alternative payments were followed by cash and payment cards, which accounted for 29.8% and 23.5%, respectively.
Nikhil Reddy, Payments Senior Analyst at GlobalData, comments: “Although ‘cash on delivery’ continues to remain one of the preferred payment methods for Filipinos, alternative payment solutions have surpassed cash to become the most preferred payment tools for e-commerce purchases over the last few years. This is supported by the rising internet and smartphone penetration, growing consumer preference and rising merchant acceptance.”
Reddy adds: “The COVID-19 pandemic has pushed the adoption e-commerce payments in the country, as wary consumers increasingly favored online shopping to avoid getting exposed to disease vectors. This has also benefitted alternative payment tools, with consumers citing convenience, speed, and reward benefits as key factors.”
The Philippines e-commerce payment market is crowed with several domestic and international alternative payment solution providers with GCash, Maya (formerly PayMaya), PayPal, and GrabPay leading the space. According to GlobalData’s 2021 financial services consumer survey*, GCash alone accounted for 18.2% share of the total e-commerce payment value in 2021.
To benefit from the growing preference for digital wallet solutions, online shopping platforms such as Shopee and Lazada also offer their own digital payment solutions ShopeePay and Lazada Wallet, respectively.
To strengthen their position in the country’s e-commerce payment market, companies are constantly expanding their payment offerings with ‘buy now pay later’ being one of their focus areas. Leading alternative payment solution GCash, for instance, launched its ‘buy now and pay later’ solution called GGives service in March 2022, allowing online shoppers to repay in up to 24 installments.
The government has also been taking various measures to push electronic payments in the country. The QR Ph (the national QR standard), which was initially available for P2P payments, was extended to merchant payments, both online and in-store payments, in October 2021, enabling consumers to make interoperable mobile-based payments by scanning the QR code at merchant outlets or online checkout page, irrespective of their payment solution provider.
Reddy concludes: “While alternative payment tools lead the Philippines e-commerce payment space, they are also now increasingly being used for in-store payments. With the growing adoption of QR code-based solutions among merchants and government initiatives to push electronic payments, alternative payments are poised to disrupt the country’s overall consumer payments space.”