THE continued preference for cash is proving to be a major hurdle for financial technology (fintech) companies, as they seek to build trust in their platforms’ security while spreading awareness of the advantages to using their offerings during the pandemic, industry representatives said.
“We know that we are dealing with a market that still chooses to pay in cash. There are a lot of security concerns on digital payments and awareness of e-payment platforms remains low,” Xendit Philippines Managing Director Yang Yang Zhang said at a virtual briefing Friday.
In 2018, online payments accounted for 10% of the total volume of transactions, up from 1% in 2013, according to estimates provided by the United Nations-affiliated Better Than Cash Alliance. By value, such payments made up 20% of the total in 2018, from 8% in 2013.
The central bank is promoting a transition to a so-called a cash-lite society by 2023, in which e-payments will make up 50% of the total volume and value of transactions.
Ms. Zhang said her Indonesia-headquartered fintech, which provides payments infrastructure for both merchants and consumers, processed 65 million transactions per year, or about 5 million each month.
“I think that it is exciting to see the Philippines starting to comprise a growing percentage of that number as well,” she said.
Ms. Zhang said opportunities in the Philippine fintech sector are abundant because of the “friendly” regulatory environment, allowing for “more disruptive, more interesting solutions that could be built here than anywhere else in the region.”
This year, Ms. Zhang said the company hopes to expand its network of banks and retail outlets linked to its platforms.
“We want to make sure that we are building experiences that are intuitive and easy enough that more Filipinos can transition to more digital payments painlessly,” Ms. Zhang said.
Xendit Philippines has a partnership with credit app BillEase, with Xendit serving as a channel to facilitate installment payments directly from consumers’ bank accounts, BillEase CEO Georg Steiger said.
He added that fintechs hope to relieve Filipinos from the burden of having to turn to predatory lenders.
“I think the best way to end (predatory lending) is to ensure better options are available. Any crackdown will only just basically push this stuff to darker corners of the market, and if it’s not online then it will be offline,” Mr. Steiger said, noting so-called five-six lending schemes have long predated online lending and are entrenched.
He said the national ID and the availability of more information sources will help both consumers and lenders bridge the credit data gap. — Luz Wendy T. Noble