Cards remain the most preferred payment tool for e-commerce purchases in the Philippines, accounting for over half of online purchases in 2022, finds GlobalData’s 2022 Financial Services Consumer Survey.
GlobalData’s E-Commerce Analytics reveal that the Philippines e-commerce market grew by an estimated rate of 31.3% in 2022 to reach PHP500.9 billion ($9.8 billion), as increasing number of consumers shift from offline to online purchases. The ecommerce market in the Philippines is expected to grow by 22.9% to reach PHP615.7 ($12.1 billion) in 2023.
Shivani Gupta, Senior Banking and Payments Analyst at GlobalData, comments: “Philippines is one of the fastest growing e-commerce markets in Southeast Asia, supported by high internet and smartphone penetration. Furthermore, the COVID-19 pandemic accelerated the shift in consumer preference from brick-and-mortar to online channels. E-commerce growth in the Philippines has also been boosted by government initiatives such as ‘Philippine e-Commerce Roadmap 2020,” which aims to promote e-commerce adoption among SMEs.”
According to GlobalData’s 2022 Financial Services Consumer Survey*, nearly 90% of the Filipino consumers reported having shopped online in the past six months, while only 6% indicated that they never shopped online.
GlobalData’s survey also revealed that among various tools used for e-commerce purchases, payment cards dominate, with debit, credit and charge cards collectively accounting for 51% share in 2022. This can be attributed to the value-added benefits offered on payment cards, including interest free instalment payments, reward programs, cashback, and discounts.
Alternative payment tools such as GCash, PayPal and PayMaya are the second most preferred payment tools for e-commerce purchases, collectively accounting for 24.5% share of transaction value in 2022.
Shivani continues: “Emergence of new payment models such as buy now pay later, which allows consumers to split total purchase amount into instalments are some of the factors supporting alternative payments growth. Several players including Atome, BillEase, Akulaku, Cashalo, UnaPay, and TendoPay are offering this service in the Philippines. E-commerce platform Lazada joined the list with its BNPL service ‘LazPayLater’ launched in November 2022.”
Despite the rise in electronic payments, over 15% of e-commerce purchases in the Philippines are still made using cash. This highlights the traditional preference for cash among Filipino consumers due to its high unbanked population and limited financial awareness, especially among rural population.
Shivani concludes: “Philippines will continue to witness high growth in e-commerce sales and increase at a compound annual growth rate (CAGR) of 17.9% between 2022 and 2026 to reach PHP968.9 billion ($19.0 billion) in 2026. Though alternative payments are gradually displacing cash and other traditional payment methods, they still have a long way to go before they can challenge the dominance of payment cards.”
