Micro, small, and medium enterprises (MSMEs) account for 99.5% of businesses in the Philippines. Yet, a large majority still rely on cash transactions and informal financing, limiting business expansion and leaving them vulnerable during economic disruptions.
During the BusinessWorld Economic Forum 2026, themed “Advancing the ASEAN Agenda: Turning Regional Vision to Corporate Action,” business executives and policymakers discussed the growing need to accelerate digital adoption among MSMEs as Southeast Asia pushes deeper economic integration.
Among the panelists was Paul Albano, general manager of GCash for Business, who highlighted how digitalization could help small enterprises widen market access and gain access to formal credit systems.
Mr. Albano said the low level of digital adoption today provides one of the largest opportunities for the financial technology sector.
“Only 20% of MSMEs have adopted digital transactions, with the rest doing business in cash. That’s the most glaring opportunity for us in GCash, which is to help these MSMEs digitize their businesses. As they digitize, they will be able to go and drive growth in expansion,” he said.
Many businesses expanded during the pandemic as households searched for alternative income sources while mobility restrictions disrupted traditional employment. Some entrepreneurs began selling products through social media platforms and digital wallets, often using personal accounts, before shifting into more formal business operations.
Mr. Albano said GCash developed its business platform partly in response to those changing patterns. Many small entrepreneurs first used personal digital wallets to receive payments before eventually seeking more formal merchant services.
The company later expanded services from payment acceptance into broader business tools that included online payment systems, disbursement services, reporting functions, and lending access.
In turn, digital payment systems accelerated after the pandemic, which changed consumer habits and pushed businesses toward contactless transactions.
Advancing financial literacy and access to formal finance
Despite wider smartphone usage and stronger digital payment adoption among consumers, financial literacy remains one of the largest obstacles preventing MSMEs from fully embracing digital operations.
As Mr. Albano observed, many small business owners still fear online scams and cybersecurity risks, discouraging them from moving away from cash transactions.
“A lot of these MSMEs do not want to go digital because of the fear of getting scammed,” he said.
He noted that education campaigns and merchant-focused financial literacy programs remain necessary to help business owners understand how digital systems work and how they can manage risks while expanding operations.
GCash for Business has expanded its services from QR-based payment collection into broader merchant services that include card payment terminals, online payment systems, disbursement facilities, and merchant management portals.
The company also offers payment devices capable of processing debit cards, credit cards, and QR Ph transactions, allowing merchants to accept multiple forms of payment under one system.
“As businesses grow and they can receive payments into their merchant wallet, we’re able to also facilitate them to pay their bills and disburse to their employees,” he said.
Meanwhile, Mr. Albano said about 80% of nano- and micro-enterprises lack access to formal credit institutions. Limited documentation and the absence of traditional credit histories often prevent small merchants from qualifying for bank loans.
Financial technology firms, like GCash, are now using transaction histories and payment behavior to assess creditworthiness among small merchants that lack banking relationships.
“We wish to expand [our service] by making solutions easy for MSMEs, not just by catering to core payment acceptance, but expanding that to the full value chain, both in-flow and out-flow funds,” he explained.
Mr. Albano added that businesses that transition from personal digital wallets into merchant accounts create transaction trails that may help companies develop alternative credit scoring models.
More than just finance
Mr. Albano said GCash currently works with more than 700 local government units nationwide. One major initiative involves digitizing transactions inside traditional wet markets through the Paleng-QR program.
The initiative allows vendors to accept QRPh or scan-to-pay QR payments while also paying suppliers digitally. Government officials and private sector partners have promoted the program as a way to modernize commerce in densely populated trading centers that historically relied almost entirely on cash.
He explained that the level of local government engagement determines whether programs gain traction among market vendors and neighborhood businesses, particularly in communities where internet connectivity remains inconsistent.
Concurrently, digitalization has widened opportunities for overseas transactions among smaller enterprises. Mr. Albano said GCash has integrated with cross-border payment and remittance systems that allow Filipino business owners to pay foreign suppliers and receive payments from abroad.
“Within GCash, we have an international business unit that can facilitate inbound and outbound remittances. Now, Filipinos can pay for their suppliers abroad using GCash outbound remittances,” he explained. “GCash as a wallet facilitates receiving payments abroad through our partnerships with different remittances and money transfer operators in banks all over the world in over 200 countries and territories globally.”
In terms of the sector’s resilience, small businesses remain among the most vulnerable during economic and geopolitical tensions. Because of this, MSMEs typically face tighter capital constraints than larger corporations, leaving them more exposed during price increases and weak consumer demand. “We’re proactively working on how to support the MSMEs through the crisis,” Mr. Albano shared. “We’re leveraging the GCash ecosystem on how to find better deals for them from a supplier standpoint,” he added.
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