Alibaba is cementing its presence in South East nations. It is now helping the Philippines build a cashless society.
Alibaba has shaped the digital economy in China. Its finance arm, Ant Financial, leads the digital payment trend. It now sets its sights on the Philippines to usher in a new cashless society.
The conditions in the Philippines are ready for a cashless society
Filipinos are ready to embrace a cashless society. Visa takes a Consumer Payment Attitudes Survey every year. The 2016 results showed that 57% of Filipinos preferred cashless payment methods. It rose from 46% in 2015. 71% of Filipinos also shopped online at least once a month, compared to 60% in 2015. The e-commerce sector in the Philippines is also strong. It enjoys healthy annual year-on-year growth of 30%.
The Philippines government is also actively encouraging the move to cashless. In December 2015, Bangko Sentral ng Pilipinas (BSP) launched the National Retail Payment System (NRPS) Framework. The national framework increases the efficiency and security of mobile payments. It will help establish Philippines’ electronic retail payment system. It aims to increase electronic payment usage to 20% of total payments. Current use sits at 1%.
The public and the government are both already willing to go cashless. However, there are still practical problems to address. Internet connectivity in the Philippines, for example, is bad. The Philippines ranked 74th out of 77 countries for internet speed. The mobile penetration and banking penetration are also relatively low.
Alibaba can help overcome the obstacles
The Philippines has a population of 103 million. Alibaba is keen to explore the untapped digital market in the Philippines. Alibaba will provide the financial technology solutions to build a cashless society. It will help develop e-commerce infrastructure by building marketplaces and strengthening logistics.
Ant Financial Group will bring inclusive financial services to overseas Filipino workers (OFWs). It will help lower remittance costs for OFWs. “There are over 10 million Filipinos working abroad, Ant Financial’s technology is helpful for them. The technology can help them manage their cash, their earnings wisely,” Finance Secretary Carlos Dominguez III said.
Alibaba Business School organised the New Economy Workshop for Philippine officials. This helped officials get a wider understanding of an e-commerce ecosystem. The Alibaba Business School will focus on Alibaba’s e-commerce training system. “We will look at the financial regulations in China and explore how we can tap digital technologies to empower our MSMEs (Micro-Small and Medium Enterprises), especially those in the countryside, the same way that Jack Ma did to help small enterprises in China gain a foothold in the global e-commerce industry,” Dominguez said.
Jack Ma, founder of Alibaba, will also discuss industry regulation with Dominguez. Ma suggests there should be right regulations to boost the e-commerce growth.
The Philippines stands to benefit from becoming a cashless society
E-commerce transactions contributed 10% to the Philippines’ gross domestic product (GDP) in 2015. The government expects it to reach 25% by 2020.
Digital payments can improve the transparency and efficiency of payment flows. The government can trace all transactions. It will thus help curb corruption. A digital payment system can also help detect fake beneficiaries.
The Alibaba Group’s digital ecosystem has created over 30 million jobs in China. The Philippines can expect an increase in employment rate by going cashless.
Ushering in a cashless economy helps both the Philippines and Alibaba. Alibaba faces fierce competition in the near-saturated domestic market in China. It is now striving to explore overseas markets.
By helping the Philippines go cashless, Alibaba can strengthen its position in ASEAN. Jack Ma wants to assist developing countries in building digital technologies. It is an intelligent business model to ensure Alibaba stays in front of the pack in emerging markets.