MANILA - The Philippines is becoming more "cash light" with  52.8 percent of retail payments in 2023 made through digital transactions, the Bangko Sentral ng Pilipinas said on Tuesday.

This translates to 2.62 billion monthly digital payment transactions out of 4.9 billion transactions - surpassing the 50 percent digital payments target under the Digital Payments Transformation Roadmap.

The said transactions amount to 110 billion US dollars or P6.1 trillion.

In 2022, total monthly retail payments grew by 42.1 percent.

BSP Officer-In-Charge Deputy Governor Mamerto Tangonan recalled that only one percent of 2.5 billion retail payments in 2013 or 10 years ago was digital.

Strong performance of merchant payments accounting for 64.9 percent of monthly digital payments mainly drove the growth followed by person-to-person transfers at 19.3 percent.

Business-to-business supplier payments were at 6.1 percent, growing double from 2022, which reflects the adoption of digital transactions in the business sector.

Tangonan noted how Filipinos have been entering the formal banking system to utilize their accounts for e-payments rather than for savings purposes.

Despite hitting the target, more work needs to be done particularly to make digital payments attractive to non-users, according to Tangonan.

Transaction fees remain a concern for consumers prompting the central bank to keep the moratorium on increasing transfer fees.

“We have to reduce the cost of digital payments… Second is to increase the trust of consumers in digital payments and that is achieved by enhancing our anti-fraud measures and initiatives to protect consumers,” Tangonan said. (around 2 mins of Q&A)

BSP also intends to expand its user base through the promotion of QR codes as preferred payment modes.

Project Nexus, a network that allows cross-border payments within minutes, is expected to be launched by 2026.

The payment scheme will allow the country’s instant payment system, InstaPay, to access the instant payment systems of other ASEAN countries such as Malaysia, Singapore, Thailand, and India.

For faster crediting of digital payments, PESONet transactions have been given a third cycle of clearing and settlement within a business day.

Under the Philippine Development Plan, the Philippines is expected to digitalize 60 to 70 percent of retail payments by 2028.