Payments Data: A Strategic Asset that Philippine Businesses Can’t Ignore

This article was first published in The Manila Times.

The Philippines is about to see what one would call a digital payments revolution. What started as a need during the pandemic – quickly adopting digital wallets, QR payments, and contactless transactions – has now turned into a major movement on how money travels, how consumers pay and how businesses flourish.

The Bangko Sentral ng Pilipinas (BSP) says that digital payments now make up about 60% of all retail transactions in the country. This is a big step toward a cash-lite economy. But this digital surge has opened up something that is even more potent than ease and efficiency: a new kind of financial intelligence that comes from payments data.

From transactions to insights

Every digital payment leaves a trail of information on who, what, where, when and how often. This is true whether the payment was made using a wallet, QR Ph or InstaPay in real time. When combined and kept anonymous, this information can give us a lot of insight into how people shop, what businesses are selling and what sectors are in demand.

This is why payments data is becoming a strategic asset for businesses, especially banks and fintechs. It lets businesses categorize customers, come up with better financing models, make personalized product suggestions and detect fraud in ways that rule-based systems can’t.

For instance, a merchant’s daily QR collections can show how their cash flow is changing in real time, which makes it easier for a bank to give them micro-credit. By looking at a retailer’s wallet transactions, the business can figure out where demand is highest, which can help make the most of promotions and inventory. In sum, payments data is the new oil of the digital economy, but only if businesses can use it wisely.

How AI can help make data-driven decisions

The raw data is useful, but AI-driven analytics are what can really make it powerful. Machine-learning models today can look at millions of transactions in a split second and find patterns that the human eye might potentially miss.

Banks can use predictive analytics to figure out how much credit they will need or how likely someone is to miss a payment. At the same time, recommendation algorithms can change loyalty programs based on how much a consumer spends in real time.

Fraud detection systems that use AI can detect unusual patterns happening across payment networks. For example, they can indicate a transaction pattern that is different from what a person usually does, essentially detecting a case of fraud even before it takes place.

This mix of data and AI changes payments from a back-office task to a front-line business strategy tool. And as more Filipinos shop online, these insights will become even more detailed and in-depth.

Finding a balance between trust, governance and innovations

With a lot of data power comes a lot of responsibility. Payments data is at the center of privacy, ethics and compliance. The National AI Strategy Roadmap, the Data Privacy Act of 2012 and the BSP’s Digital Payments Transformation Roadmap all stress how important it is to innovate in a responsible way.

Organizations need to include robust governance frameworks into their systems, such as anonymization, consent management, explainable AI and secure-by-design architectures, in order to get value from data without losing trust. Customers will provide more business to companies that show they are honest and open with their data collection practices.

The FSS view: Creating a smart payments backbone

At FSS, we believe that the future of payments isn’t only about making transactions faster; it’s also about understanding them better.

FSS helps banks, fintechs and payment processors turn operational data into useful information by adding powerful AI and analytics to the payments stack, which includes issuing, acquiring, reconciling and mitigating fraud.

Our global platforms give decision-makers real-time information that helps them improve business performance, cut down on fraud and make digital experiences more tailored for end users. In a market that changes quickly, like the Philippines, this information can give a business the much-needed edge over its competitors.

A call to action for businesses in the Philippines

The next big step in the Philippines’ payments industry won’t be how many individuals stop using cash; it’ll be how well businesses use the data they have to come up with transformative ideas.
– For banks: Use AI-powered analytics to tailor services to each customer and make banking more accessible to everyone.
– For fintechs: Create ecosystems around payment data so that BNPL, micro-insurance or contextual offers can be provided in a seamless manner.
– For merchants: Use transaction data to build loyalty and accurately predict what customers want, oftentimes even before the customers realize what they want.
– For regulators: Encourage a regulatory framework that encourages secure and transparent use of data through cooperation amongst industries.

On the whole, payments data and AI will make the Philippine digital economy more open, data-driven and competitive on a global scale. If used correctly, they can turn every pixel of a transaction into real economic value. 

Also read: Why the Philippines’ Investment Vision Matters for Global Growth