Merchant payments remained the main engine of digital retail transaction growth in the Philippines in 2025, as more consumers and businesses adopted scan-to-pay methods, according to a report from the Bangko Sentral ng Pilipinas (BSP).

The BSP's 2025 Report on E-Payments Measurement, published Tuesday, showed that person-to-merchant (P2M) payments accounted for 74.31% of total digital retail payments last year, with most transacted through QR Ph, the Philippines' national quick response (QR) code standard. Launched in 2019, QR Ph lets customers of any participating bank or e-money issuer pay a merchant by scanning a single interoperable code, rather than relying on separate closed-loop systems run by individual providers. The model mirrors other national QR schemes in Southeast Asia, such as Thailand's PromptPay and Singapore's PayNow.

"This continued to make merchant payments the largest retail payment use-case, reflecting the increasing reliance of consumers and businesses on digital channels for everyday purchases of goods and services," the BSP said.

By volume, P2M transactions jumped 33.22% to 2.93 billion in 2025 from 2.2 billion the previous year. The value of merchant payments, however, plunged 54.24% year on year to $13.2 billion (P815.4 billion) from $28.8 billion (P1.8 trillion).

"Although transaction value declined by 54.24% to $13.20 billion, the continued increase in transaction volume suggests that consumers increasingly relied on digital payments for more frequent and relatively lower-value retail purchases, further embedding digital payments into everyday commerce," the central bank said.

"This sustained growth was supported by BSP's continued efforts to strengthen the merchant payment ecosystem through policy reforms and market development initiatives."

The BSP added that merchant acceptance and participation expanded, with infrastructure also increasing. The total number of payment acceptance terminals rose 12.9% to 316,795 from 280,598 in 2024.

"This growth was driven primarily by the expansion of mobile POS (point of sale) terminals, which increased by 20.52% to 168,565, while traditional POS terminals grew by 5.33% to 148,230," the central bank said.

Mobile POS setups turn ordinary smartphones into payment acceptance devices, a cheaper path to digital acceptance for smaller merchants than dedicated card-reading hardware.

Person-to-person (P2P) fund transfers emerged as the second-largest use case, comprising 17.7% of total digital retail payments in 2025.

"P2P remittances accounted for 17.70% of all electronic transactions, driven by the rapid expansion of InstaPay, reinforcing the role of instant, low-cost transfers in daily financial activity," the BSP said.

InstaPay, launched in 2018, and PESONet, launched in 2017, are the two national electronic fund transfer rails created under the BSP's National Retail Payment System framework, which the central bank established to give Filipinos safe, interoperable alternatives to cash and checks.

Business-to-business supplier payments, meanwhile, cornered 3.67% of digital payments last year, largely driven by the upgraded PESONet multiple batch settlement, which added same-day settlement cycles to what had been a once-daily batch service.

Overall, the share of digital payments in total retail transactions reached 64.7% last year, up from 57.4% in 2024, the central bank said on Monday. This marked the first year the share fell within its 60%-70% target under the Philippine Development Plan, which runs from 2023 to 2028 and sets the benchmark as part of the government's broader push to digitize economic transactions.

Digital payments volume in 2025 stood at 3.937 billion, exceeding the 2.149 billion paper-based transactions recorded during the year.

By value, however, online transactions accounted for just 53.3% of total retail payments, below the previous year's 59%. This was equivalent to $125.07 billion worth of digital payments versus $234.57 billion in total retail transaction value.

The BSP also logged 3.68 billion person-initiated electronic payments, making up 74.91% of all person-initiated transactions.

In 2025, nearly all government payments — 98.92%, or 42.19 million — were digital. Digital transactions held only an 18.75% share (211.08 million) of business payments, which the BSP said shows "significant untapped momentum for further digitization in business-related payment flows." Business-related flows fall within the scope of the BSP's Digital Payments Transformation Roadmap for 2023 to 2028, which sets further goals for deepening digital payment adoption across the economy.

"We are seeing encouraging results from efforts to reduce frictions in the payments ecosystem," BSP Deputy Governor Mamerto E. Tangonan said in a statement. "Recent actions by banks and e-money issuers to lower or eliminate fund transfer fees are making digital payments more accessible to Filipinos, while growing adoption creates greater value for all users. At the same time, trust remains central to digital transformation."

Since last month, many financial institutions have lowered or waived their interbank retail fund transfer fees in compliance with BSP Circular 1238, issued on June 17, which required them to adopt reasonable, fair, and market-based pricing for these transactions. — Katherine K. Chan