A Guide to Local Payment Methods in the Philippines


Anta Pattabiraman


April 19, 2022

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5 Top Payment Methods Philippines Customers Prefer

The payment methods Philippines customers use have multiplied as financial technology has advanced. Where cash was once king, an expanding range of digital payment options is increasing in popularity. With the growing importance of the Filipino market, B2C eCommerce and B2B SaaS companies doing business in the Philippines need to be prepared to accept customers’ preferred payment methods. Here’s a look at why payment gateway Philippines providers are becoming more prevalent and a roundup of the most popular payment methods in the Philippines.

Why the Philippines Payment Gateway Market Is Growing

Payment gateways are becoming more important in the Philippines as the country’s large English-speaking population is becoming more active in e-commerce. A combination of untapped potential and an emerging market positions the Philippines for strong eCommerce growth, according to an overview of data assembled by the U.S. Commerce Department.

The Philippines lags behind some countries in digital payment infrastructure development. Smartphone penetration only reached 72.1% of households in 2020, and broadband speeds for both mobile devices and fixed Internet connections are relatively slow. As of 2019, 51.2% of the population didn’t use banks, and just 8% used credit cards. Because of these and other factors, cash remains the predominant payment method in the country.

However, this lagging technology development is coupled with growing demand for mobile phones and fintech, transforming it into untapped potential. Mobile phone usage is on the rise, with a pandemic slump in smartphone sales in the first half of 2021 offset by 42% growth in the second half of the year, for overall 5% growth year-over-year, according to Chinese tech news site Gizmochina.

This increase in smartphone usage is propelling greater demand for fintech to support eCommerce. To offer online payment methods Philippines brick-and-mortar retailers have begun allowing customers to buy items on the Internet and pay for them in cash at physical locations. Financial service providers also have introduced digital payment options for both customers who don’t have bank accounts and those who do. Regulatory guidelines for online payment gateways have been implemented by the central bank of the Philippines, the Bangko Sentral ng Pilipinas (BSP).

Combined with growing mobile use, this puts Philippines eCommerce on track to double by 2025, according to forecasts by fintech provider UnaFinancial. Let’s look at some of the most popular online payment methods Philippines customers use.

The Philippines’ Most Used Payment Methods

The most popular payment methods in the Philippines include:

  1. Cash on delivery (COD) payments
  2. Over-the-counter (OTC) transfers
  3. Digital wallets
  4. Digital bank transfers
  5. QR code payments

Some of these methods are geared toward customers who shop online but pay with cash, while others are designed for online payments. Let’s look at how each method works.

Cash on Delivery (COD) Payments

With cash still the preferred method of payment in the Philippines, cash on delivery has become the most popular way to pay for online purchases. When using COD, the customer makes their purchase online, then comes to a physical location to pay for the item with cash and pick it up.

To automate this method, a merchant needs cash on delivery management software or a payment gateway that can accept COD payments. For some payment gateways, this may require a third-party plug-in.

Over-the-counter (OTC) Transfers

Over-the-counter payments offer another cash payment option which is popular in the Philippines. With this method, customers can pay for online purchases in cash by depositing money at a bank or by using an ATM transfer. Major Filipino banks such as BDO and Metrobank support this option. Some convenience stores such as 7-Eleven also provide OTC services.

Digital Wallets

Digital wallets allow mobile and online users to use digital apps to access funds from credit and debit cards which are linked to their accounts. Unlike cash payment methods, they can be used to accept payments from credit card and debit card holders and from customers who shop exclusively online. They can also be used by mobile phone owners shopping in brick-and-mortar stores. Digital wallets which are popular in the Philippines include Gcash, PayMaya and GrabPay.

Digital Bank Transfers

Digital bank transfers are direct electronic transmissions of funds from one bank to another. They can be used to credit or debit accounts. They can be used by online and mobile customers.

Digital bank transfers are facilitated by networks of participating financial institutions, known as automated clearing house (ACH) networks. The Philippines has two major ACH networks: PESONet ACH, established in 2017, and InstaPay ACH, established in 2018.

QR Code Payments

A quick response (QR) code is a barcode that encodes information that can be read by a scanning device, including a smartphone camera. QR codes can be used to store financial information such as data from bank accounts, credit cards or payment gateways. This enables QR codes to be used for mobile payments.

As smartphone usage has been growing in the Philippines, QR code payments have been gaining popularity. The pandemic gave additional impetus to QR code adoption, making QR codes an increasingly important payment method in the Philippines.

Accept the Payment Methods Philippines Customers Prefer

While the Philippines has lagged behind in financial technology infrastructure, growing smartphone adoption has begun to reverse this trend. Retailers have introduced a growing range of options to receive payments in both cash and digital form. Cash on delivery payments and over-the-counter transfers allow customers who prefer to buy online and pay in cash to make purchases. Digital wallets, bank transfers and QR code payments provide options suitable for mobile and online customers.

A growing number of providers offer solutions in each of these areas. Rather than trying to integrate them all on your own, the simplest solution is to adopt a payment integration platform which lets you connect with whatever payment providers you need. The inai payment integration platform supports over 300 payment methods from around the world, including the Philippines, with the ability to customize, letting you connect with every payment method your customers need. You don’t need any coding knowledge to get up and running in under 60 minutes. Book a demo to get started today and expand into the Philippines with Inai.

About the author
Anta Pattabiraman is the co-founder and CEO of Inai, a global payment stack simplifying native payments within a single integration. Over the last 5 years, he has worked with 200+ businesses ranging from SMEs to Bigtechs.
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