Stronger cyber guardrails needed as device-based payments gain ground

THE ENTRY of Google Pay and Apple Pay into the Philippine market will help boost e-commerce but also heightens the need for stronger guardrails to ensure the integrity of the digital payments system as more people transact online.

Google Pay this month entered the country through the launch of Google Wallet, which allows users to link debit or credit cards to the e-wallet. Apple Pay is expected to be available by next year.

“This would broaden the electronic payments of many Filipinos internationally, not just limited to local e-wallets and digital payments solutions,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Thus, this could also lead to some potential loopholes for international fraudsters that would widen their potential reach, thereby necessitating urgent measures to safeguard versus these and further boost cybersecurity and financial literacy,” he said.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said the availability of these transaction channels will boost digital payments and convenience, but also heightens the risk of cyberattacks as scammers could shift from methods like SMS phishing to “more sophisticated tactics like fake app links, spoofed merchant sites, and social-engineering that tricks users into approving payments.”

“Consumers need strong device security, app-based transactions (not links), alerts, and limited-exposure cards or wallets,” he said in a Viber message.

“Regulators should apply the same safeguards required of banks and e-wallets, clear liability rules, fraud monitoring, data protection, and fast takedown of malicious sites so adoption increases trust rather than risk.”

These new payment channels could help the Philippine digital economy grow faster, Oikonomia Advisory and Research, Inc. Economist Reinielle Matt M. Erece said in a Viber message.

“Similar to already existing digital payment channels, the risks are still on verifying whether numbers or recipients are legitimate. Hopefully, the SIM registration and other digital laws can help in reducing the risk of scams and fraud.”

Mr. Rivera added that while current safeguards provide consumers with some protection, wider adoption of device-based payments, especially for high-value transactions, could put these channels at risk of being targeted by fraudsters.

“Existing rules cover KYC (know-your-customer), data protection, and fraud monitoring, but new risks require more granular protections, especially around liability, device security, and cross-platform fraud. What’s needed are clearer rules on who bears losses in unauthorized transactions, stronger requirements for biometric authentication and real-time fraud detection, and faster coordination between banks, telcos, and platforms to shut down phishing sites and fraudulent apps,” he said.

“In short, the framework is solid, but we need tighter enforcement, faster response mechanisms, and updated guidelines so regulation keeps pace with more sophisticated digital fraud.”

The digital economy contributed 8.5% of Philippine gross domestic product in 2024, little changed from 8.6% in 2023 but well below the 2021 peak of 9.2%, which was during the height of the coronavirus pandemic.

The Philippines’ digital economy is set to hit $36 billion in gross merchandise value (GMV) this year, supported by rapid adoption of e-commerce, transport and delivery services, digital finance and artificial intelligence, according to a report by Google, Temasek Holdings and Bain & Co.

The report also projected that the country’s overall digital economy could reach $70 billion to $140 billion in GMV by 2030, slightly lower than last year’s forecast of $80 billion to $150 billion.

The share of online payments in monthly retail transactions in the Philippines stood at 57.4% in terms of volume and 59% in value terms in 2024, Bangko Sentral ng Pilipinas (BSP) data showed. These are up from 52.8% and 55.3%, respectively, in 2023.

The BSP is targeting to achieve a 60% to 70% share of digital payments over total retail payments volume by 2028, in line with the Philippine Development Plan. — A.M.C. Sy