Real-time payments to boost PHL GDP

REAL-TIME PAYMENTS are seen contributing an additional $323 million to the Philippine economic output and providing access to financial services to 20.9 million unbanked Filipinos by 2028, according to a study by ACI Worldwide in partnership with The Centre for Economics and Business Research (Cebr).

The report titled “Real-Time Payments: Economic Impact and Financial Inclusion,” which covers 40 countries, shows an empirical link between real-time payments and financial inclusion, ACI Worldwide said.

“By providing citizens with access to affordable financial services, real-time payments drive economic growth and could potentially help lift millions of people out of poverty,” it said.

The Philippines was in third place among the top 10 countries for the projected financial inclusion uplift by 2028 as a result of the growth of real-time payments, only behind Pakistan, which is expected to see 63.5 million unbanked individuals getting access to financial services, and India’s 25.5 million.

The expected increase in the Philippines’ banked population by 2028 represents a 23% growth from the projected end-2023 level, the report said.

“This increase presents a profit opportunity of $28.7 billion for financial institutions by 2028, calculated based on the typical customer lifetime value estimated at $1,375,” ACI Worldwide said.

The Philippines was in second place among the top markets for profit opportunity from instant payments, behind Pakistan ($173 billion) and beating India ($25 billion).

The Philippine gross domestic product (GDP) boost expected to be provided by real-time payments is also equivalent to 29,238 jobs, it added.

“The rise of real-time payments has the potential to open up banking access to millions of new customers, presenting significant growth and profit potential for banks that capitalize on this to modernize and streamline payment technology and services. Real-time payments have asserted their role as a powerful enabler for societal transformation, bridging critical gaps in financial access and empowering millions of Filipinos,” ACI Worldwide Senior Vice-President Leslie Choo said in a statement on Thursday.

“The Philippines’ digital payment landscape is at an inflection point driven by rapid adoption and government initiatives, signaling immense growth potential… As the Philippines continues to charge forward in digital payment adoption, real-time payments are positioned to deliver significant economic and social benefits, building a connected financial ecosystem that supports consumers and businesses alike,” ACI Worldwide added.

Bangko Sentral ng Pilipinas data showed the share of online payments in the total volume of monthly retail transactions rose to 52.8% in 2023 from 42.1% in 2022. This was slightly higher than the central bank’s target of digitalizing 50% of the volume of retail payments by end-2023.

Asia Pacific is the world’s largest real-time payments market with 24% of all transactions now done instantly, the report said, and cross-border payment systems provide another avenue for financial inclusion in the region.

“Asia Pacific’s opportunities to benefit from real-time payments — economically as well as socially — should continue their rapid growth. The trajectory elevates the region not only as a model for technological change but as a reimagining of how economies can function more efficiently, competitively, and inclusively,” it said.

GLOBAL ECONOMIC BOOST
Meanwhile, globally, real-time payments are expected to contribute an additional $285.8 billion to economic output and create more than 167 million new bank account holders by 2028, the report showed.

This, as real-time payments boosted GDP by a total of $164 billion in 2023 in the 40 countries covered by the study, generating $116.9 billion in savings for consumers and businesses. These savings are predicted to grow to $245.8 billion by 2028, it said. 

“Our research finds that across the world, the ability to pay instantly for goods and services, often via mobile phones, is driving economic growth at every level of society and providing affordable and innovative financial services to tens of millions of previously unbanked citizens,” ACI Worldwide said.

“By allowing for the transfer of money between consumers and businesses within seconds rather than days, real-time payments improve overall market efficiencies in the economy. This results in substantial net savings for consumers and businesses. Those savings, combined with the increased treasury revenue from formalizing previous cash transactions, are boosting GDP growth for countries that have embraced real-time payments modernization.”

Instant payments are boosting financial and digital inclusion among women, the youth, and low-income citizens, it added.

Other economic advantages from real-time payments are lower transaction costs, faster settlement, and reduction in the cost of failed transactions, the report showed.

“As real-time payment systems become pervasive, they are improving the lives of citizens who previously had no access to the formal banking system. For people living day to day on cash, switching to real-time electronic transactions is strongly correlated with a financial inclusion uplift. This correlation holds across multiple countries, making real-time payments a banking “gateway” that brings the benefits of financial inclusion long recognized by the World Bank to millions of citizens, including better financial security, reduced economic inequality, and increased entrepreneurship and community well-being,” it said.

“Through real-time apps, QR codes, and mobile wallets, previously unbanked and underbanked citizens can gain access to useful and affordable financial products and services and, for example, receive life-changing government aid (such as farm subsidies or school fees) at the click of a button,” it added. “The inclusion benefits from real-time payments are particularly evident in the developing world, with its large swaths of unbanked and underbanked citizens.” — AMCS