'Digital' Filipinos to stick with cashless payments, online shopping in new normal: Visa study

MANILA - Majority of Filipinos plan to keep on using digital payments and e-commerce even after the coronavirus pandemic is contained, a Visa study released Thursday showed.

At least 70 percent of Filipino respondents said they intend to stick with digital payments instead of cash when the crisis is over, a Visa study conducted in 40 countries worldwide showed.

Asia Pacific preference to digital payments is at 78 percent, compared to the global average of 68 percent, it said.

"In this new normal, we’re seeing a shift – Filipinos are becoming more digital, and the COVID-19 situation has forced consumers to adopt this change in behavior," Visa Country Manager for the Philippines & Guam Dan Wolbert said.

A total of 73 percent of consumers said they were likely to "increase" or "sustain" their current online shopping behavior compared to 72 percent global average, Visa said. 

Thirty-seven percent of Filipino respondents said online shopping is a positive experience, compared to 35 percent global response, the study showed.

One in 6 active Visa cardholders also made an e-commerce purchase for the first time this year, shopping for essential goods, medicines and paying bills, the financial firm said.

Online shopping and cashless payments surged in the Philippines after the COVID-19 lockdown was imposed in March. Delivery of essential goods were allowed, while cashless payments were encouraged to reduce human to human contact. 

Metro Manila remains under general community quarantine until July 31, where services, businesses and restaurants are operating at a limited capacity. 

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In high-tech Japan, cash is still king

TOKYO - Once a pioneer in cashless transactions, Japan is now lagging behind as the world's biggest economies increasingly embrace electronic payments -- because its ageing population still prefers physical money.

Four out of 5 purchases are still made with cash in Japan, despite its reputation as a futuristic and innovative nation. In South Korea, some 90 percent of transactions are digital, while Sweden aims to be a cashless society as early as 2023.

But in Japan, where crime and counterfeiting is virtually non-existent so people feel more comfortable carrying cash, consumer response has been sluggish.

At Katsuyuki Hasegawa's bike repair shop customers are invited to settle their bills using PayPay -- a tie-up between Softbank and Yahoo -- using a QR code via their smartphones.

But only "two or three" people a week are using the service, Hasegawa tells AFP.

"In a place like this, everything is very slow. We get lots of old people who like to chat while getting out their money. They don't need quick transactions," says the 40-year-old shopkeeper.

"Personally, I prefer cash. With PayPay, you don't keep track of your money," he adds. 

With Japan becoming the first "super-aged" society with more than 28 percent of people 65 or over, it is harder to persuade consumers to take up new technology, according to Yuki Fukumoto, an analyst at the NLI Research Institute.

"The challenge from now on is how to motivate people" to change their habits, said Fukumoto.

This is a serious challenge in a country with more than 200,000 ATMs and where most small shops will only take cash to avoid high transaction costs.

Many were also put off when retail giant Seven & I Holdings suffered a hacking attack immediately after launching a new QR-code payment system and was forced to scrap the scheme.

 'Outdated and collectable'

Yet it was way back in the 1990s that Japanese firm Denso Wave developed the first QR codes now frequently used in cashless payments, while Sony has offered a chip used on public transport and for payments since the 2000s.

Payment cards for transport systems in Tokyo and other cities are also often used for small purchases from vending machines or convenience stores, but cash remains preferred for other transactions.

The Japanese government is hoping to seize on a wave of tourists expected to flood in for the 2020 Tokyo Olympics to double the amount of electronic payments to 40 percent by 2025.

It also plans to introduce a points system to partially reward customers paying by cashless means as a way to mitigate a controversial hike in consumption tax from 8 percent to 10 percent from October.

Tokyo perhaps has an eye on the costs of such a dependence on cash, estimated by a Boston Consulting Group survey at 2 trillion yen ($18 billion) to maintain ATMs and transport money around securely.

Companies, too, are doing their best to promote a cashless society. Earlier in the year, mobile company Rakuten started "100-percent cashless" stadia for its baseball and football teams.

Akiko Yamanaka, who runs a chic restaurant called "Koguma" ("bear"), said a 10-percent discount introduced by PayPay for diners who settle the bill using their system had attracted several people.

"The more campaigns there are like this, the more people will convert to cashless," said the 54-year-old.

And Rakuten boss Hiroshi Mikitani is convinced that the future is cashless, even in Japan.

"One day soon, money as we know it -- notes and coins that we carry with us -- will be as outdated and collectable as vinyl discs are now," he said in a recent blog.

Nevertheless, he admitted that "security has to be improved" for this to happen, especially in the wake of the QR hack.

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Choosing the right plastic: When to go credit or debit

MANILA, Philippines - Have you ever opened your wallet and wondered if you should use your credit card or debit card? Both provide the convenience of cashless transactions and make paying a breeze. Like many cardholders, you have probably asked yourself when it makes sense to use one over the other.

Although they offer similar features, credit cards and debit cards are not as alike as you think.

Credit cards are issued by banks or credit card companies. To get one, you go through the whole process of applying for a card and proving your capacity to pay. When you use a credit card, you are doing so with borrowed funds that must be settled in full or partially on your next payment due date.

On the other hand, debit cards can only be issued by banks. To get a debit card, you have to open a savings or a checking account. The ATM card which you use to withdraw money is the same card you will use for debit transactions. When you use a debit card, you are using funds you already have in your own account.

If you own both, there are instances when using one makes more sense than the other.

Use your credit card when:

You are shopping online. 

Credit card companies offer security features that would be especially useful when you are shopping online. When you make an online purchase using your card, there is a lag time during which a verification of the purchase is made, allowing you to dispute a charge. Further, credit card companies can offer insurance against fraudulent purchases for a nominal fee.

You need to buy time between purchase date and payment date. 

When your cash is tight but you need to make an immediate purchase, say for emergencies or for important items such as medicine or tuition fees, then your credit card will be most helpful. It gives you the extra elbow room right when you need it.

‘Gives’ is your best option. 

Credit cards allow you to amortize payments over a period of time, ranging from as low as 3 months to as long as 2 years. During promotional periods, you can avail of 0% payment terms which allows you greater flexibility in setting budgets. In contrast, this cannot be arranged when you use a debit card.

You want to buy goods to be used in the future. 

For purchases like tickets and hotel bookings that are meant to be used in the future and may be rebooked or cancelled, credit cards make a better choice. Should your plans change, you will be able to get your refund through a reversal of charges on your credit card.

You want to make a recurring payment. 

When you want to make regular automated payments, usually for payments made for subscription, utilities, service providers, or voluntary donations to a charitable organization, it makes more sense to use a credit card. This is particularly helpful when you want to stop the recurring payment, with the card company able to reject payments billed by the merchant.

Use your debit card when:



You don’t have enough cash in your wallet for small purchases. 

A debit card is a convenient tool to have. It acts like an extension of your wallet, saving you from having to make that trip to the ATM machine to withdraw money.

You don’t want to rack up additional debt. 

When using a debit card, you are actually using money that you already have. Using it allows you to control your spending and live within your means. If you want to cut down on borrowings but don’t want to carry cash, then you should use your debit card.

You want to withdraw money abroad. 

Sometimes it is cheaper to withdraw foreign exchange from your own account once you to get to your destination instead of charging your credit card. This is because conversion rates for withdrawals are sometimes lower than that charged by credit card firms. However, there may be corresponding charges for these withdrawals so it would be best to check with your bank and credit card provider before proceeding.

Whether you choose to pay with a credit card or make a debit card payment, you may be entitled to rewards or rebates. Credit cards regularly offer rebates and rewards. When you are keen to accumulate any of these, or when the rebates being offered are superior to that when you pay in cash, then a credit card makes a better choice.

As banks try to get more of its clients to pay with a debit card, they too are throwing in similar rewards, so in these instances, cash is no longer king. In any situation, always look for the best value for your hard-earned money.

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