Southeast Asia has become a very fast growing market for e-commerce, with emons trading reaching $ 26 billion in 2019. S&P Global Market Intelligence report released earlier this year. Still, the Philippines, which continues to function primarily as a cash-based society, remain an outlier in the region (not included in S & P’s figures) and are on the verge of entering new markets in e-commerce and payments. It offers companies attractive opportunities.
Current landscape
One of the greatest challenges for the country is that, despite technological advances, more than 51 million adults, or 71% of the adult population, are left without being deposited into the bank. That doesn’t mean there is no transition to mobile and electronic payments. A major initiative to invest in technology and prioritize e-commerce has been launched by the government to improve financial inclusion and tackle the logistical challenges posed by the country’s unique geography of more than 7,500 islands. ..
And even before this government initiative, Filipino consumers began using electronic payments. GCash and Paymaya are the most popular digital wallets in the United States, along with Alipay and Grab. Consumers use these wallets for small items such as paying subscription bills, but more country citizens also purchase groceries and other necessities through these wallets. It is noteworthy that the number of active Emony wallets quadrupled to 8.8 million between 2017 and 2019. However, despite the ever increasing number of Emodies transactions in the Philippines, ecommerce merchants need to be flexible to accept and potentially consider payments. Cash on delivery service (cash on delivery) to expand your reach.
Challenges during the game
As the country with the highest e-commerce cash on delivery acceptance in Southeast Asia, cash is ingrained in Filipino culture. Cash on delivery is typically offered by social commerce sellers and new retailers who have not yet gained consumer trust. These types of merchants are likely to use a money back guarantee to offer cash on delivery to their customers and use these methods to differentiate themselves, gain trust, and build loyalty in the marketplace.
If cash is still king, global ecommerce merchants face three challenges. It is important to remember that cash on delivery carries risks and potential fraud, as well as rejection of delivery, which can be costly for sellers who do not have the right funds. The process returns. At the same time, as Filipinos take money and the payment infrastructure begins to change, emerging economies have yet to find ways to incorporate cash into payment services. And they need to understand that citizens are unfamiliar with new payment technologies and not using cash can slow progress.
Logistics problems also occur in countries where it takes more than a week for goods to arrive after a transaction. Consumers must pay a 10% deposit when ordering and the balance is payable upon arrival of the goods. The pre-approved transaction is valid for 14 days. These factors often force merchants to accept multiple payments in a single order.
Infrastructure changes can alleviate problems in the long run, but cause problems in the short term. Interoperability of payments with different payment methods can be time consuming. This interbank network initially supports participating banks, but does not. The e-wallet player as often seen in different markets.
However, the country’s government promotes local businesses through subsidies, and those willing to adopt such payment methods can also benefit from tax cuts and exemptions. Such remedial measures are beneficial as Filipino SMEs often struggle to pay local business taxes and therefore stop opening bank accounts for themselves.
future
The Philippines is gradually embracing digital payments, and it is time ecommerce merchants stepped up their adoption efforts. Ecommerce merchants currently doing or looking to do business in the country have the opportunity to capitalize on this change by working with third parties who have a deep understanding of the market. The ability to accept a variety of payment options, including cash, will help ecommerce merchants thrive in the Philippines and open up more opportunities in Southeast Asia.
About Sue-AnnSeet
Sue-Ann Seet is responsible for dLocal’s Asia expansion and is responsible for developing strategic expansion plans for operations in this key region. Prior to dLocal, he was Head of the Payment Management Team at Wise (formerly Transferwise) and helped accept 16 currencies in Asia. At the same time, she introduced an efficient process that enables product scalability, crisis management, training and onboarding. Sue-Ann holds a Masters Degree in IT in Business from Singapore Management University. He also holds a bachelor’s degree in social sciences from the National University of Singapore.
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