Real-Time Payments Surge in the Philippines

In the Philippines, there has been significant growth in real-time payments in recent years. A report by ACI Worldwide, an American payment systems company, revealed that instant payments made up 47.2% of all electronic payments in 2023, an increase from 40.3% in 2022 and 24.7% in 2020.

It is projected that by 2028, real-time payments will represent 58.7% of cashless transactions, with a compound annual growth rate (CAGR) of 14.6% expected between 2023 and 2028.

The report titled "2024 Prime Time for Real-Time," which was published on April 30, offers insights into the advancement of real-time payments across 51 countries. It emphasizes the ongoing growth of real-time transactions in the Philippines, with 777 million transactions recorded in 2023 and a projected 1.5 billion instant transactions by 2028.

These findings are corroborated by Visa's most recent Consumer Payment Attitudes Study, which surveyed 1,000 Filipino consumers aged 18-65 through online interviews conducted between October and November 2023. The study reveals a rising trend among Filipinos towards embracing cashless transactions.

The research indicates that nearly nine out of ten Filipinos are not only aware of but also interested in utilizing contactless cards and QR codes for their transactions. In 2023, 32% of Filipinos utilized contactless cards primarily driven by the affluent demographic, while 55% used QR codes, showing a minimum adoption rate of 50% across different age groups except for the 59-65 age bracket, which stood at 31%.

For mobile wallet users, 38% of consumers prefer paying through QR codes, making mobile wallets the most favored source for QR payments. The majority of mobile wallet users (78%) prefer scanning QR codes for in-store payments.

Despite the increasing popularity of real-time payments, cash remains the dominant mode of payment in the Philippines. In 2023, cash transactions accounted for a substantial 98.1% share of the payment volume, whereas real-time payments only represented 0.9% of the total payment volume during the same period, as per data from the ACI Worldwide report.

An investigation carried out by merchantmachine.co.uk ranks the Philippines in the top 10 nations that heavily depend on cash transactions, specifically in the seventh spot, with around 66% of Filipinos still conducting transactions without bank accounts.

Real-time payments in the Philippines

In 2018, the Philippines launched its real-time payments system called InstaPay, enabling immediate fund transfers among banks and non-bank electronic money issuers (EMIs) through smartphones, tablets, or laptops. InstaPay supports payments using account numbers, QR codes, or registered local mobile numbers, including interoperable QR payments at local stores, with a maximum transaction limit of PHP 50,000 (US$856) for person-to-person transfers.

Alongside InstaPay, the Philippines also operates PESONet, a bulk transaction processing service managed by the Philippine Clearing House Corporation (PCHC). PESONet clears transactions multiple times a day, ensuring same-day processing for transfers made before the cut-off time and next-day processing for those made after the cut-off or on non-banking days.

These initiatives are part of the Bangko Sentral ng Pilipinas (BSP)'s Digital Payments Transformation Roadmap 2020-2023, a national strategy aimed at advancing the digitalization of the country's payment systems. The plan's key objectives include digitalizing half of the retail payment volume and increasing financial inclusion to 70% of Filipino adults by 2023.

The Philippines is also working towards linking its InstaPay system with other real-time payment systems in Southeast Asia, overseen by the Bank for International Settlements. This project seeks to enhance cross-border payments among Indonesia, Malaysia, Singapore, Thailand, and the Philippines.

Furthermore, the Philippines participates in the Regional Payment Connectivity (RPC) initiative, which aims to establish a unified QR code-based cross-border payments system connecting all Association of Southeast Asian Nations (ASEAN) countries. Currently, eight countries are part of the RPC.

India as the world’s biggest real-time payments market

The ACI Worldwide report delves deep into some of the world’s top real-time payments markets and highlights India as the largest player in instant payments.

In 2023, the country processed nearly 130 billion real-time payments, representing 49% of the total global real-time transactions. This number exceeds the combined real-time payments of the following nine countries in the global market, according to the report.

The success can be attributed to the Unified Payments Interface (UPI), which was developed by the National Payments Corporation of India and established by the Reserve Bank of India and the Indian Banks Association.

Introduced in April 2016, UPI enables real-time payments through QR codes, mobile numbers, and virtual identification. Its services are available in 500 banks, with substantial growth driven by government demonetization policies and the integration of non-bank entities.

Real-time payments in India made up 84% of electronic transactions in 2023 and constituted over half (53.4%) of the country's transactions. With a growing trend towards mobile-based real-time payments over cash, ACI Worldwide predicts that real-time payments will represent 69% of all transactions by 2028.

Indonesia leapfrogs ahead

Indonesia introduced its inaugural real-time payment system, BI-FAST, in December 2021. Despite entering the market later, the country has rapidly become one of the fastest-growing real-time payment markets globally, recording nearly 2 billion real-time payment transactions in 2023 and achieving a Compound Annual Growth Rate (CAGR) of 44.6% from 2023 to 2028.

BI-FAST, a real-time payment system, is specifically designed to streamline and secure electronic transactions efficiently. It allows for immediate fund transfers and payments through account details, mobile numbers, or email addresses, operating round the clock. BI-FAST plays a crucial role in Indonesia's Payment System Blueprint IPS 2025, aiming to modernize the country's payment infrastructure and integrate its digital economy.

Real-time payments represented 2.7% of transactions in Indonesia in 2023, a percentage projected to increase to 13.1% by 2028. Instant payments made up 11% of cashless transactions, a proportion expected to reach 35.4% by 2028.

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