WHILE digital payments are recognized as an enabler and driver of digital transformation, the pivot from cash to digital as the primary mode of payment should happen now. It is the widespread use of cash that will be a major stumbling block to the country’s bid for digitalization.
This was pointed out by Globe President and CEO Ernest Cu in a recent interview about the new normal. He noted that it will be difficult to scale if businesses, especially those engaged in e-commerce, will remain dependent on cash as payment for goods and services.
Although online transactions are steadily increasing, majority of Filipinos and many businesses who go online still prefer Cash-on-Delivery which entails a lot of risks such as loss of funds due to accident, carelessness, or theft; unlocated address, refusal by the customer to accept the item, and more worrisome, the spread of COVID-19 virus.
“Cash is a pain because of security issues and it is expensive to handle. There are also so many impediments in delivering goods in this country because the addressing system is very poor and so it’s hard to find places. People also have this notion that COD is not actually a purchase but an option to buy. So If they don’t like the product then they would not answer the door or phone call that comes from the courier. How will the seller earn from this? How will they scale?” Most especially under the current environment, less cash handling is better,” said Cu.
He added that cash is also a hindrance to the growth of telemedicine and other related services in the Philippines. Telemedicine providers, such as KonsultaMD, offer 24/7 access to licensed doctors for a fraction of regular face-to-face consultation. However, it is impractical for patients to pay in cash since medical advice is given either through the phone or through video calls.
Cu also mentioned the tollways where cars line up in the cash lane and cause traffic build up instead of opting for the faster and more convenient Radio Frequency Identification (RFID) compatible lane which provides motorists with seamless travel.
Despite the prevalence of cash, Cu said Filipinos are already warming up to the idea of electronic money. GCash, for instance, received further boost in usage during the pandemic where physical distancing and the community quarantine necessitated the use of digital means to pay and transfer money not only among individuals but also among organizations.
“GCash already had good momentum going into the pandemic and had even more momentum in the middle of it. The awareness level has increased. The trial has increased. The number of transactions has increased. Everything has just increased in terms of numbers. And the good thing is that people who even said that they don’t need the service are actually requesting us to increase their wallet limits within a matter of days or weeks of using the product. That’s how convenient it is,” he said.
Due primarily to the people’s need for contactless platforms, the GCash App saw a 200% increase in the number of installations from March 15 to April 15 and a 250% growth in the number of app registrations for the same period, making it one of the top five most downloaded apps in Android. A lot of private, non-government, and government organizations also use GCash to crowdsource donations and to distribute funds.
Digital payments like GCash can be used not only for consumer spending and business procurement but also to help improve the payment ecosystem across groups such as payments from the citizens to the government and vice versa, for increased security, efficiency, and convenience.
According to the World Economic Forum, mobile money contributes directly to 13 of the 17 United Nations Sustainable Development Goals. It “provides financial services to individuals and small businesses that would otherwise be financially excluded; enables access to electricity, water and sanitation (e.g. via mobile pay-as-you-go solutions); facilitates access to low-cost remittances; provides means for parents to pay school fees; and facilitates cash transfers during emergencies." These are among the global challenges that can be addressed to improve health and education, reduce inequality, and spur economic growth.