Digital Cash is King
Cash, as in physical notes and coins, has apparently been dethroned. According to the 2024 Status of Digital Payments in the Philippines report released by the Banko Sentral ng Pilipinas (BSP), the share of online payments in monthly retail transactions has risen to 57.4 percent in terms of volume and 59 percent in value terms in 2024. The Manila Bulletin also quoted BSP officials as saying that the rise of digital cash “reflects the long-term impact of market developments, policy initiatives, and the growing trust and familiarity of Filipinos with digital payment options.”
The fact that we can pay using “digital wallets” installed on our phones is something that still blows my mind. I still remember when I was a kid helping out my mother sell shrimps and fish in Divisoria, one of my tasks was to run to other vendors whenever we need “panukli (change).” Sometimes we would run out of coins and a customer would pay us big bills so my mother would send me, “Boy, mamalit ka nga ng panukli (Boy, go get some change.)”
We have all gotten used to carrying around cash and paying for stuff with cold, physical cash. When the concept of paying using digital cash using a digital wallet was introduced, I was very skeptical, just like most of our kababayans, I suppose. How is that possible? How can he be paying me with something that I cannot see and touch? How secure is that QR code I am scanning? These were the questions we all asked.
But today, Filipinos have become more accustomed to paying with digital cash as evidenced by the BSP report. Think about it, six out of 10 transactions are now cashless. Filipinos are paying for their food through digital wallets. They are buying clothes and other stuff in malls by tapping their phones or scanning QR codes. I think this became extremely popular during the pandemic when most businesses were sort of “forced” into digital cash payment channels because of the pandemic. There was genuine fear that cold cash changing hands can actually transmit the fatal virus so contactless payments became desirable.
Aside from health and safety, cashless transactions are indeed convenient — no need to fumble for cash, no worries about exact change, and instant confirmation of payment. For businesses, especially small and medium enterprises (SMEs), I imagine that the shift to cashless payments offers many advantages. First, it speeds up transactions which in turn reduces queues and improves customer satisfaction. It also makes bookkeeping and financial transparency more efficient. Moreover, digital payments allow businesses to target tech-savvy millennials and overseas Filipinos who can easily send money or pay remotely.
The rise of digital cash is also very beneficial to entrepreneurship. Digital finance tools enable businesses to access credit, insurance, and investment products more easily, fostering growth and resilience. I think there are banks now in which you can open an account even without going to the bank. For entrepreneurs, embracing cashless payments means joining the digital economy, where innovation and agility are key competitive edges.
There are still security concerns, of course. I am not sure if there will ever come a time when we will be 100 percent confident of the security of digital transactions. In the same way that robbery, sleight of hand cheating, and other scams threatened traditional cash transactions, digital payments is not immune to the evil that lurks in human nature. At any rate, the cybersecurity firm Kaspersky noted in their study of Southeast Asian consumers that 42 percent of the 1,618 respondents had “experienced social engineering frauds via text or phone calls.” They added that “phishing scams have been reported by 37 percent of respondents, while 35 percent have received false offers and deals.” Technological barriers persist too, especially in rural areas where internet connectivity and smartphone penetration are still catching up.
I think it is safe to say that a fully cashless society is still a work in progress. So much work needs to be done. Cash remains vital for many, especially in far-flung provinces and among older generations who may be less comfortable with technology. When we travel to other countries, there are still areas where you need hard cash to buy and pay for stuff. Still, the key to success lies in addressing the persistent challenges: ensuring affordable internet access, strengthening cybersecurity, and building consumer confidence through education and transparent policies. Only then can digital finance truly become an everyday tool for all Filipinos, from bustling Manila to the smallest barangay in a far-flung municipality.
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