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Nexus between payments digitalization and cash usage in the Philippines

Author

Listed:
  • Eloisa T. Glindro

    (Bangko Sentral ng Pilipinas)

  • Rodalee E. Ofiaza

    (Bangko Sentral ng Pilipinas)

  • Ma. Klarizza Q. Jose

    (Bangko Sentral ng Pilipinas)

Abstract

Innovative contactless payment technologies are transforming retail payments, suggesting a gradual decline in cash use, particularly in advanced economies with an early start on digitalization. In the Philippines, preliminary analysis indicates some substitution from cash to digital payments, albeit not on a large scale yet. While the remarkable inroads in retail payments digitalization and demographics are expected to bring about a behavioral shift in cash usage, the pace and extent of substitution are contingent on policy reforms aimed at widening access to affordable digital payment services, secure digital infrastructure, and privacy protection, among others. More granular data would help inform strategies for equitable and safe payment choices, enabling consumers to securely access and freely choose from diverse and affordable payment options that suit their needs. Thus, it is vital for cash and digital payment infrastructures to adapt and uphold consumer payment choice.

Suggested Citation

  • Eloisa T. Glindro & Rodalee E. Ofiaza & Ma. Klarizza Q. Jose, 2024. "Nexus between payments digitalization and cash usage in the Philippines," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 61(1), pages 44-70, June.
    • Handle: RePEc:phs:prejrn:v:61:y:2024:i:1:p:44-70
    as

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    File URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1049/974
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    References listed on IDEAS

    as
    1. Jeremy Srouji, 2020. "Digital Payments, the Cashless Economy, and Financial Inclusion in the United Arab Emirates: Why Is Everyone Still Transacting in Cash?," JRFM, MDPI, vol. 13(11), pages 1-10, October.
    2. Christopher Henry & Doina Rusu & Matthew Shimoda, 2024. "2022 Methods-of-Payment Survey Report: Cash Use Over 13 Years," Discussion Papers 2024-01, Bank of Canada.
    3. Cabezas, Luis & Jara, Alejandro, 2021. "The demand for cash: stylized facts and substitution by electronic means of payment," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    4. Jeremy Samer Srouji, 2020. "Digital Payments, the Cashless Economy, and Financial Inclusion in the United Arab Emirates: Why Is Everyone Still Transacting in Cash?," Post-Print hal-03015357, HAL.
    5. Mr. Tanai Khiaonarong & David Humphrey, 2022. "Falling Use of Cash and Demand for Retail Central Bank Digital Currency," IMF Working Papers 2022/027, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    central banking; payments digitalization; cash demand; ordinary least squares;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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