THE likelihood is high for the Philippines to skip that stage of development where transactions are cashless, like they are now elsewhere in the region, and go straight to that stage where Filipinos become mobile warriors.
This was the considered view of Praveen Kumar, general manager for Asia Pacific at ASG Solutions Software, in reference to that period when much of Asia and countries in the Pacific skipped the pager or beeper era
in the 1990s.
He said the Philippines may skip altogether that stage of credit-card revolution, where each and every transaction is cashless and transactions happen not in the form of a credit card but through the mobile phone.
Much like how the majority of Asia has skipped the pager or beeper in the 1980s, Kumar put the two technologies side-by-side, comparing the reception of the region’s market to the product.
“Asia missed the pager revolution because we skipped a generation. We advanced forward because we were late in a lot of things. We just skipped. So I think the credit-card revolution, which happened in many Asian countries, we will just skip it and become mobile warriors,” Kumar told the BusinessMirror.
According to him, worldwide smartphone sales were to increase 3.1 percent to 1.48 billion in 2016, according to research firm International Data Corp.
The Philippines received a shipment of 3.5 million smartphones in the first quarter of the year alone.
IDC said the growing smartphone adoption among Filipinos and stronger support from telco operators helped the Philippines smartphone market achieve growth of 20 percent year-over-year, making the country the fastest-growing smartphone market in Southeast
Asia to date.
Based on this, Kumar said, while an extensive credit-card penetration or usage in the Philippines is clearly lacking at the moment, “in ten years’ time it may not be a concern anymore because [by then]everybody is using their mobile.”
In previous reports, local banks and financial institutions have campaigned for cashless, stronger and more extensive use of card transactions.
Cards are considered generally safer than carrying cash and good for the economy and the liquidity
in the market.
Data from Euromonitor International showed there are only 7.36 million credit cards in circulation in the Philippines, even as there are 35.36 million debit cards for a population of some 102 million.
In the United States some 304 million Visa credit cards were in circulation in 2014 for a population numbering 318.9 million. A majority of the American population has two or more credit cards.
“It’s a mind-set change. It’s not the Philippines alone, but in developing countries in Asia, also across the world. Cash is usually black money.
The use of cards is trying to legalize all the activity in the market. Cash can lead to a lot of black money that you can’t control. Bottom line is, cards are very good for the economy, very good for the government.” Kumar said.
Nevertheless, the market in Asia is slowly becoming mobile-dependent and with the influx of smartphone sales.
Kumar said the growth he is seeing in financial transactions is starting to shift to mobile.
“Mobile banking internationally is bigger than card banking. It’s a fact. You look at any country, there are mobile phones in every country.”