Nexus between payments digitalization and cash usage in the Philippines

Abstract

Innovative contactless payment technologies are transforming retail payments, suggesting a gradual decline in cash use, particularly in advanced economies with an early start on digitalization. In the Philippines, preliminary analysis indicates some substitution from cash to digital payments, albeit not on a large scale yet. While the remarkable inroads in retail payments digitalization and demographics are expected to bring about a behavioral shift in cash usage, the pace and extent of substitution are contingent on policy reforms aimed at widening access to affordable digital payment services, secure digital infrastructure, and privacy protection, among others. More granular data would help inform strategies for equitable and safe payment choices, enabling consumers to securely access and freely choose from diverse and affordable payment options that suit their needs. Thus, it is vital for cash and digital payment infrastructures to adapt and uphold consumer payment choice.

JEL classification: C20, E42, E58, O33