The powerful mental shift in favor of digital solutions driven by the COVID-19 pandemic, along with a clear course taken by the government and the fintech sector toward a cash-lite economy, have ensured that the Philippines’ digital transformation path is moving in a positive direction.

Visa’s recent consumer payment study reveals that the amount of cash carried, and the number of purchases using it among the population, has decreased by 61 percent and 48 percent, respectively. The same goes for the e-commerce boom. Digital consumers in the Philippines have increased by at least 12 million people (as per Google), as a direct consequence of the pandemic. According to another estimate by Visa, 52 percent of Filipinos made their first online purchase during this period.

These two factors combined stand at the root of the current rise of mobile or electronic wallets. Aside from being a matter of convenience and necessity during the height of lockdowns, their accelerated development is facilitated by a confluence of regulatory policy, the willingness of the population to use digital financial solutions (the level of cashless payments adoption in the Philippines reached an impressive 92 percent last year), and the further popularity of e-commerce—largely thanks to double-digit sale activation.

As a result, the level of mobile wallet penetration promises to rise by at least 41 percent by 2025, while unique users of digital wallets in the country by 2025 were expected to be in the 65 to 76 million range (2020: 25-27 million). In reality, everything appears to be happening at an even faster rate: the users from just two Philippine market leaders are already estimated at no less than 47 and 66 million people, respectively.

As dictated by another powerful global trend—digital universalization—the function of making payments has long ceased to be the only one that e-wallets can boast about. A contemporary e-wallet user can take out loans and insurance, open savings accounts, invest in crypto assets, make purchases from marketplaces, manage their personal budget more efficiently, and use a wide range of solutions for small to medium enterprises, with the effectiveness of the latter scientifically confirmed.

The universalization will first result in market leaders, thanks to the already gained scale and reach, promising only to grow stronger. This is already apparent: GCash, Maya, and, arguably, GrabPay hold a firm grip on the market.

Second, in their efforts toward versatility, e-wallets inevitably come close to, and sometimes unceremoniously ignore, the boundaries of the more traditional banking sector. Moreover, the key audience of e-wallets is the unbanked and underbanked, who are thoroughly hungry for full-fledged complex financial services. The recently launched Maya Bank is a shining example of just that.

Third, solutions that welcome external interactions the most are better positioned. These are the ones that allow connecting multiple different cards to one wallet, interact well with other services, and enable transactions in the international market.

The push for universalization also promises to intensify cross-border ties, recently exemplified by the Indian Pine Labs, entering the Philippine market. This case is especially relevant, as it relates to lending, and to BNPL (buy now, pay later) in particular. Considering the growing appetite, changing perception of inclusive credit solutions in the country, and Filipinos buying in small amounts due to high inflation, products lacking these features, especially those that can be applied to a wide range of goods and services, are missing out on additional success.

Niche products find themselves in a good position as well, even without integrated lending solutions. These include, for example, solutions enabling OFW remittances from the Middle East, payments for self-employed citizens, and convenient shopping in stores.

Finally, the ability to save and earn passive income as a function of an e-wallet is also becoming more prominent. Strangely, the future of e-wallets will very likely be shaped by how much money can be earned with their help. For fintech players addressing this new challenge, the issue of their scale as such will surely be one of their lesser worries.

All of these positive developments signal the need for successful market coexistence for many projects, and not just for giants. In the very near future, the Philippine e-wallets market—complemented by inclusive financial solutions—will be positioned to bring an even more convenient and pleasant user experience to the population.