Changing consumer behavior is sweeping across the Philippines as the growth of e-commerce is forecast to more than double over the 5-year period from 2020 to 2025. The e-commerce market in the Philippines is predicted to grow at a 2.5% rate to reach a staggering $12 billion, according to an UnaFinancial report.
More specifically, an emerging online payment method called Buy Now, Pay Later (BNPL) is showing great potential in the Philippines due to its less painful payment approach. In 2020, 3% of all online transactions in the Philippines, valued at $150 million, was attributed to BNPL. By 2025, BNPL is expected to contribute 7% in 2025 to all local e-commerce transactions, totaling nearly $843 million.
The rising popularity of BNPL is being attributed to the increasing number of fintech providers being spurred by rising consumer demand, based on the survey. Another report said that BNPL growth was fueled by the convenience and digital simplicity it offered, specifically to the unbanked and underbanked market, meaning those without bank accounts or who lacked sufficient savings.
Revealing a darker side of the economy and consumer spending, the UnaFinancial survey also revealed that about 42% of respondents could not pay outright for online purchases worth more than PhP50,000. Meanwhile, 17% said they needed additional sources of income to pay for online purchases.
Both reports said the growth of e-commerce in the Philippines reflects that of Southeast Asia as a whole as more merchants and payment providers adopt the BNPL method.