Cashless payments are growing in the Philippines, are buyers and sellers ready?

Cash has been a staple in the Philippine market for as long as we can remember. However, as the future goes cashless with contactless credit cards, debit cards, and e-wallets, the use of cash has decreased in favor of these more convenient methods.

For example, a popular mall in Cubao, Quezon City, has gone mostly cashless and has urged all of its vendors to adopt a popular e-wallet as their main mode of payment. As the digital transformation continues, how would both customers and businesses prepare for cashless payments? More importantly, are we all ready to go completely cashless?

What is cashless payment?

Cashless payments refer to transactions that occur without the exchange of physical currency. This modern payment method has gained significant traction due to technological advancements and changing consumer preferences, particularly accelerated by the COVID-19 pandemic.

What are the types of cashless payments?

Cashless payments can take various forms, including:

• Debit and credit cards: In the Philippines, credit cards and debit cards are the most common methods, allowing consumers to pay in-person or online by swiping, inserting, or tapping their cards at point-of-sale (POS) terminals.
  
• Mobile payments: This category includes smartphone payments using applications like Apple Pay, Google Pay, and Samsung Pay. These often utilize Near Field Communication (NFC) technology for contactless transactions.
  
• E-wallets: These are services that securely store payment information, enabling quick transactions without physical cards.
  
• QR code payments: Users scan a QR code with their smartphone to initiate a payment.
• Bank Transfers: Electronic transfers between bank accounts that can be initiated via online banking platforms.
  
• Buy Now, Pay Later (BNPL): This allows consumers to make purchases and pay for them in installments over time.
  
• Cryptocurrencies: Digital currencies such as Bitcoin and Ethereum facilitate peer-to-peer transactions without a centralized authority.
  

What do cashless payments mean for customers?

A 2020 study from Visa Philippines on Consumer Payment Attitudes found that around 70% of Filipinos have already gone cashless. Four out of five respondents are willing to go cashless, citing its convenience and speed. The company also found that seven in ten Filipinos already use contactless payments much more frequently than they did two years ago.

Cash remains the most popular form of payment as of 2020. However, around 75% of Filipinos have already tried cashless payments. Almost 50% said they can survive a month without cash, while 60% can only go cashless for around three days.

The study showed that while many consumers are willing to enter a completely cashless economy, the Philippine consumer market still has a long way to go before it can truly go cashless. However, the new normal may have pushed average consumers towards cashless payments sooner than expected.

To prepare for cashless payments, customers should familiarize themselves with various payment methods, ensure they have compatible devices and set up e-wallets. Additionally, understanding security features and expressing preferences to businesses can enhance their cashless experience, making transactions quicker and more secure in the evolving payment landscape.

What do cashless payments mean for businesses?

One of the issues preventing the economy from going completely cashless is the slow uptake from the business sector.

Because of the rise of e-commerce, many businesses are open to cashless payments. But those with traditional stores are not yet fully equipped to accept online payments, so they are still in a cash-only payment mode.

To prepare for cashless payments, businesses should implement several key strategies. First, they need to understand customer preferences by offering various payment options, including credit and debit cards, e-wallets, and QR codes. Next, investing in secure cashless payment processing systems is vital to protect against cyber threats. Additionally, businesses should train staff on handling cashless transactions and clearly communicate available payment methods to customers through signage and marketing. Finally, encouraging cashless transactions with rewards or discounts can help foster customer adoption and enhance overall satisfaction.

So, is the Philippines ready to go completely cashless?

Until every consumer has a smartphone and instant access to the internet and every business is fully equipped to accept cashless payments, the country is still a long way from eliminating paper currency and going completely cashless. Should you decide to practice having no cash on hand and keeping it all in mobile banking apps, online wallets, and cards, take note of the following pros and cons.

Advantages

• Convenience—Gone are the days when you had to count your change or find smaller bills to make smaller purchases. Cashless payments eliminate the need to carry cash or withdraw money for purchases.
  
• Discounts and cashback promos- Not only are most online banking and digital wallet apps free, but they may also provide discounts and cashback promos that encourage you to use these apps rather than pay in cash. Maximizing your credit card benefits through these platforms can save a few pesos when spending on specific items or at participating stores.
  
• Budgeting and money tracking- Another benefit of credit cards and e-wallets is the ability to track where your money goes, often in real-time. Unlike cash, which can be difficult to track down to the last peso, every purchase you make is automatically tracked and listed for your reference. So, if you need help budgeting and keeping track of where your money goes, you don’t have to write down each entry, as apps do the work for you.
  

Disadvantages

• Not applicable to all stores- Sari-sari stores, small businesses, and other shops are still on a cash-only payment mode, making it difficult for you to purchase if you don’t have cash on hand.
  
• Phishing risks- Unless you are fully aware of the different kinds of online payment scams and are tech-savvy, you may be at risk for phishing and other online scams. So, before going completely cashless, read up on ways to protect your accounts.
  
• Lost or stolen phone- Not only does losing your phone put you at risk of identity theft, but it also limits your access to all your online apps. If you do not have cash on hand, it can be difficult to make purchases until you retrieve your accounts.

The Philippines has made major strides in its journey to becoming a cashless country, yet there’s still much more to explore. Only time will tell where this cashless journey will take us!