How the COVID-19 Pandemic affected the Mobile Payment Behavior

of Filipino Millennials

Jorge Patrick A. Yasay

Lyceum of the Philippines University Manila, Claro M. Recto Academy of Advanced Studies, Master
of Business Administration Program, Muralla Cor. Real Sts., Intramuros, Manila, Philippines 1002

Abstract.

This paper seeks to provide an understanding on how millennials, particularly Filipino millennials,

behave as consumers using mobile or online payment platforms. The recent years, especially during the

height of the COVID-19 pandemic, showed a rapid growth in information technology. Information

technology and the boom of online and mobile shopping platforms and applications have evidently

influenced the Filipino millennials’ behavior as consumers. Also, mobile payment platforms were

encouraged as the Philippines tried to transition to a cashless society and prevent the spread of the

COVID-19 virus. This boom changed buying patterns, gave a wide array of options and resulted in an

increased accessibility to various products and services which were once available only in physical stores.

The research presents Filipino millennials as online buyers whose online purchase behaviors are affected

by attitude, subjective norm, and perceived behavioral concern. This paper provides insights on why

Filipino millennials are now very fond of “online shopping” as opposed to a period of time when their

online purchases are less frequent due to issues of trustworthiness (i.e., considerations of security

vulnerabilities), usefulness (i.e., availability of alternative options such as traditional retail channels), ease

of use, and behavioral intention, among other factors. This paper would allow marketers for mobile and

online payment to understand better and attract the Filipino millennial market.

Keywords: mobile payment, Filipino millennials, online shopping

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1. Introduction

“Ate, may GCash?” Perhaps many of us have used this line whenever we do our purchases

nowadays. Although it was only in recent years that there was a rise in the popularity of using Gcash and

other mobile payment platforms, the mobile money markets in the Philippines have been existent for

around two decades already with SMART Money launched by Smart Communications in 2001, and

GCash launched in 2004 by Globe Telecom. (GSM Association, 2012) Despite their existence for quite

a long time already, the growth and popularity as a mode of payment were not as much as the recent

years when contactless payments have been highly encouraged and when people were required to stay

at home due to quarantine restrictions.

Aside from mobile payment platforms, credit cards and debit cards remained to be staples or

popular vehicles for cashless transactions. Due to exigency of times, both “banked” and “unbanked”

consumers became part of cashless society. At the height of the pandemic, cashless transactions became

the norm since almost everyone could not go to malls or physical stores. Online shopping platforms

such as Lazada and Shopee eventually became a need. Similarly, GrabFood and FoodPanda were our go-

to for our food cravings. In response, as an additional safety protocol for both the delivery staff and

purchasers, there was a time when online payment was strongly encouraged. Even with the use of

transportation network vehicles (TNVs), such as Grab, there was a time when only cashless payment

was allowed.

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 As expected, the behaviors that we adopted during these times, have been developed into habits,

and people have now considered it as the default. Consumers appreciated the safety and convenience

that cashless transactions brought about. The safety aspect of cashless transaction is still much

appreciated even now, almost three years after the COVID-19 outbreak, considering that the world and

not just the Philippines, is yet to be “COVID-free.” Likewise, as the adage goes, “old habits die hard.”

Considering that we had experienced the convenience of not having to go to physical stores, we saw the

ease in getting something we want at our fingertips. Further, many employers still implement work-

from-home and hybrid work setups which likewise resulted in change in consumer behavior and

encouraged online purchase behaviors.

It must also be highlighted that this change is brought about by a generation of technology-savvy

and technology-dependent individuals, comprising among others of the millennials. These millennials,

born after 1985 with a great degree of exposure at a very young age (Pineda & Bernhardsson, 2011),

transitioned from traditional platforms at school, work, and retail to the technology age. The typical

Filipino millennial from all economic classes owns, or at least has access to, mobile phones. Many of

these millennials’ day-to-day activities are reliant on said gadget.

Thus, considering this paradigm shift, it is important for businesses to understand how they can

maximize the changes in attitude and behavior of Filipino millennials as of recent years.

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2. Pre-pandemic mobile payment behavior

In a paper published in 2016, it was found that Filipino millennials are “very critical about the

consequences that could happen when they buy online” because they perceived the Philippines to have

a low readiness for online shopping infrastructure (Legaspi et al., 2016). Aside from security perception

and concerns, said study also found that the factors which affected the non-preference for online

shopping among the Filipino millennials included the lack of value-added experience, non-

differentiated product offering and non-appealing price points.

A more recent “pre-pandemic study” also explored the characteristics of Filipino millennials in

online buying behavior (Nartea et al., 2019). During the time that the study was conducted, sales

promotion (which included competitive prices, good shipping rates, free returns and special discounts)

was the leading factor which affect online shopping behavior. Consumers visit online shopping sites

which display discount coupons or vouchers and similar offers.

Other factors that affected the online shopping behavior of Filipino millennials then were the

social environment, logistics, and online reviews and feedback. At the time, the Filipino millennials

would assess heavily the reputation of the online store and the product. It must be pointed out that, at

these times, most of the online stores were not aggregated by mobile shopping applications such as

Lazada and Shopee. These mobile applications now have a mechanism to verify a store, such as

“ShopeeMall” for Shopee and “LazMall” for Lazada.

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 Thus, as compared to before, it seems that now, it is easier to look for reputable stores as such

verification system is provided by the applications themselves.

Interestingly, the cited study also revealed that one of the reasons why the Filipino millennials

during pre-pandemic are apprehensive of online shopping is due to their distrust over the electronic

payment system. One of the things they consider is the availability of a cash-on-delivery (COD) payment

scheme. The respondents of said study were not into online shopping because of their concerns about

online fraud and hacking. They even disagreed that credit cards do not facilitate transactions, and they

do not prefer using said cards while shopping from online stores. Said study, however, did not touch on

the availability of mobile payments such GCash and Paymaya, among others, perhaps considering the

possibility that at that time, these modes of payment were not as popular as they are now.

Other factors were not highlighted in the afore-cited studies. This is perhaps due to the

difference in the conditions during pre-pandemic. Online shopping was not considered yet as a need

and is merely an option. Shoppers did not have to think about a life-threatening virus when going

outside in buying their groceries, shopping and dining out. Thus, unlike before, health was not

something that shoppers would have to put at the top of their considerations. Besides, as mentioned,

considering the lockdowns, going online was not a necessity.

Before the COVID-19 pandemic, Legaspi et al. (2016) reported that:

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 [The] Philippine Daily Inquirer’s Pedroso (July 2015),

MasterCard’s study found that Filipinos turn to the Internet to

purchase the following: Airline tickets (38.4 percent), home appliances

and electronic products (35.1 percent), clothing and accessories (31

percent), hotels (29.9 percent) and computer software (29.4 percent).

Meanwhile, sites of apps stores (50.1 percent), music downloads

(42.6 percent) and home appliances/electronic products (38.2 percent)

draw the most web traffic, the study also showed. Why do Filipinos go

online to shop? Ease and convenience are the most cited reasons. “Most

of the Filipino respondents are satisfied with online shopping,

describing it as easy (73.3 percent), convenient (71.9 percent), or fun

(64.4 percent), and expressing greater likelihood to purchase in the next

six months (79.2 percent).

The study also found more Filipinos using their mobile phones

to purchase items— from 21.4 percent in 2012 to 34 percent in 2014,

with 94.2 percent of participants able to access the Internet via smart

phones, MasterCard noted, adding that those who purchased via mobile

phones did so because they were able to do it “on the go.” (Mastercard,

2014)

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 Also in accordance with the study of Euromonitor (2016)

During 2015, m-commerce gained a strong following because of the

increasing usage and dependency of Filipinos on their smartphones.

Popular online shopping conglomerates such as Zalora and Lazada

launched their respective mobile applications earlier in the review

period and are now being highly used by their customers when they

browse their catalogues and purchase products. Aside from money

transfer service payment options that internet retailers accept via Globe

G-Cash and Smart Money, Smart e-Money Inc partnered with Citi

Philippines and Visa to offer Charge2Phone. This service is said to be

the first sticker-based contactless payment product in the country,

which allows mobile phones to be transformed into a credit card or

wallet. This innovation is expected to further encourage cashless

purchase via the internet.

Significant growth of internet retailing in the Philippines was

credited to retailers’ continued efforts to develop their businesses by way

of providing more product options to their customers, widening their

reach to serve other areas apart from Metro Manila and carrying out

recurrent promotions such as giving away discounts or markdowns.

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 Even before the COVID-19 pandemic, the Filipino millennials live fast-paced lifestyles which

prompted them to look for ways to make things more convenient for them. This prompted shoppers to

explore alternative methods of purchasing such as online shopping. This exposure to alternative retail

channels prepared the Filipino millennial for a more expansive mobile payment methods that

proliferated during the pandemic.

As anticipated, and as a response to health concerns, mobile and online payment continued to

experience strong growth as Filipino millennials became more drawn to online shopping and mobile

payment even at physical stores for reasons of convenience, as well as to minimize the spread of the

COVID-19 virus. In addition, Lazada, Shopee and other mobile shopping platforms gave a wide

selection of products and gave sales promotions that the Filipino millennial shopper enjoyed.

In the past few years, we also witnessed that more and more online sellers and retailers expanded

their reach and started to cater to the needs of other areas in the Philippines outside of Metro Manila

and other major cities.

3. Filipino Millennials’ Mobile Payment Perception

More recently, one study explored and compared the perception of Generations X and Y over

mobile payments, and their intention to use them. The study supported the view that Generation Y, or

the millennials, are more willing to use mobile payments, and that they do not need a step-by-step guide

in doing so. The technology acceptance model, based on the Theory of Planned Behavior (Aboelmaged

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& Gebba, 2013), predicted such generations’ intention to use mobile payments (Valencia, et al., 2021).

The results of said study revealed that that consumer attitude is the most significant predictor of one’s

intention to adopt mobile payment for both Generations X and Y. For Generation X, perceived

usefulness and perceived ease of use are key considerations among Generation X in the usage of mobile

payments.

Meanwhile the intention of Generation Y or the millennials to use mobile payment is more

driven by trustworthiness and compatibility. This implies that businesses who want to attract the

Filipino millennials should introduce mobile payment as a trusted technology which is compatible with

their lifestyle (Valencia, et al., 2021).

Thus, it can be deduced based on the studies discussed so far that the Filipino millennials’ gave

importance to security in mobile payment, both before and during the time of the COVID-19

pandemic.

The more important change, however, is the importance of lifestyle compatibility in affecting

the Filipino millennials’ intent of using mobile payment. This lifestyle compatibility should be

understood in the context of the changes in lifestyle brought by the COVID-19 pandemic. Most

Filipino millennials (and even Filipinos in different generations) became more hooked in social media

platforms, and this also affected their overall lifestyle, thus making them more technology-savvy. Hence,

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a generation that is almost completely reliant with technology is expected to embrace technology and

platforms which suit such technology-driven lifestyles.

For this reason, it becomes very apparent why the Filipino millennials became more welcoming

of mobile payment platforms. Thus, unlike before when these were just “options,” due to the pandemic,

this became their default, especially for those Filipino millennials who live in urban communities and

those cities and municipalities which have a reliable mobile infrastructure. Thus, as compared to when

GCash was launched, it peaked during the pandemic, and this cannot be considered as a mere

coincidence. Everyone had to adapt, and everyone’s lifestyles had to change. Consistent with our nature

of adaptability, mobile payment transactions slowly became a norm.

4. Government Response

Before the COVID-19 pandemic, we already had statutes for consumer protection such as the

Bangko Sentral ng Pilipinas (BSP) Circular No. 1055 issued on October 10, 2019 known as the

“Adoption of National Quick Response Code Standard.”

However, more protection and regulatory measures were issued at the height of the COVID-19

pandemic. The BSP issued the following: BSP Memorandum No. M-2020-033 (April 2020) entitled

“Waiver of Fees Related to the Grant of License or Authority to Provide Electronic Payments and

Financial Services”; BSP Circular No. 1089 (July 7, 2020) entitled “Payment System Oversight

Framework”; BSP Circular No. 1135 (January 21, 2022) entitled “Guidelines on the Settlement of

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Electronic Payments Under the National Retail Payment System (NRPS) Framework”; BSP Circular

No. 1140 (March 24, 2022) entitled “Amendments to Regulations on Information Technology Risk

Management,” among other measures.

Before the former Philippine President Rodrigo Duterte stepped down of his office, Executive

Order No. 170 dated May 16, 2022, was issued. This Executive Order mandated the adoption of digital

payments for government disbursements and collections.

The Philippine Department of Trade and Industry (DTI) and Department of Labor and

Employment (DOLE) issued Joint Memorandum Circular No. 20-04-A Series of 2020 which was also

further supplemented by the National Privacy Commission (NPC) when it issued NPC Advisory No.

2020-03 entitled “Guidelines for Workplaces and Establishments Processing Personal Data for COVID-

19 Response.”

Together, the DTI, the Department of Agriculture, the Department of Health, the Department

of Environment and Natural Resources, the Intellectual Property Office, and the NPC issued Joint

Administrative Order No. 22-01 Series of 2022 on March 4, 2022. This is entitled as the “Guidelines for

Online Businesses reiterating the Laws and Regulations applicable to Online Businesses and

Consumers.” Said issuance recognized in the first whereas clause that the COVID-19 pandemic has

disrupted traditional business models and rearranged economic structures forcing the accelerated

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growth of e-commerce, along with the drastic rise in consumer complaints and fraudulent online

transactions.

In addition to the foregoing governmental issuances, the DTI also launched the e-Commerce

Philippines 2022 Roadmap with the objective to gain the trust and confidence of the Filipinos in e-

commerce to increase e-commerce transactions, and to help create a safer environment for online

consumers and merchants.

Thus, consistent with the concerns of the Filipino millennials, the Joint Administrative Order

No. 22-01 Series of 2022 imposed the following responsibilities on online business: fair treatment of

consumers, upholding responsibilities, compliance with laws and regulations, conformance to local

standards, ensured quality and safety, honest and truthful communication, price transparency, proper

recordkeeping, review and cancellation options, responsive consumer complaint and redress system,

consumer information security, online payment security, desistance from online spamming, non-

proliferation of fake news online reviews, and consumer education on online risks. In addition, online

businesses also have obligations on consumer product and service warranty, labeling requirements and

price tag placement.

5. Conclusion

The foregoing analyses of previous studies, in relation to existing governmental issuances, show

that Filipino millennials are now more akin to using mobile payment platforms. Filipino millennials

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remain to be highly likely to be very critical about the consequences that could happen when they use

mobile payment platforms, especially online. However, due to exigency of times brought especially by

the COVID-19 pandemic, the Filipino millennials adapted and started to embrace this fully in their day-

to-day lives.

During pre-pandemic period, there was a low readiness for mobile payment infrastructures as

perceived by the Filipino millennials, which served as barrier for their adaptation. Considering that

online business and, to an extent the Philippine government, strengthened the sense of security

perception to the consumers during the COVID-19 pandemic, this resulted in more confidence in the

mobile and online payment platform environments.

Businesses should continue to use sales promotions in increasing the value-added and

convenience to the Filipino millennial customer and be enticed in purchasing products using mobile

payment methods or otherwise. Focus on free shipping, vouchers, rebates, and discounts should still

remain as these continue to be appealing to the Filipino millennial consumers.

Establishments should maintain the credibility and reliability even though the Filipino

millennial consumer is now more ready to use mobile payment platforms.

Mobile payment platform providers such as GCash, Paymaya, banks, etc. should also continue

to strengthen data security measures and comply with both international and local standards to ensure

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that the Filipino millennial consumers will have continued reliance on mobile payment. Considering

the momentum, this should be maximized so that more business and the economy as a whole would

benefit from the paradigm shift. Previous studies suggest that reliability, credibility and security remain

to be primordial concerns of the Filipino millennial consumer. Hence, multi-stakeholder efforts,

including the government, are required to maintain and strengthen our going digital.

6. Recommendation

Future research can bring more depth to the topic under consideration by an investigative

approach of examining the specific factors which changed the behavior of the Filipino millennial

consumer upon the outbreak of the COVID-19 pandemic. It would also be interesting to conduct a

similar study for Filipino people of other generations, such as Generation X and Z. It will be insightful

to see the contrast in adopting technology among the different generations.

Other areas of potential study would be the adaptation of GCash in our payment system in the

Philippines, whether it is the leading mobile payment platform now, and the potential for introducing

competitors in the Philippine market.

The literature available were studies conducted before the COVID-19 pandemic. Hence, the

perceptions towards mobile payment which changed during the COVID-19 pandemic has changed

drastically. Thus, for the government, it would also be useful to understand cybersecurity measures that

can help boost the mobile and retail economy, and the Philippine economy in general.

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References:

Aboelmaged, M., & Gebba, T. (2013). Mobile banking adoption: An examination of the technology

acceptance model and the theory of planned behavior. International Journal of Business

Research and Development, 2(1), 35–50.

GSM Association. (2009). Mobile Money in the Philippines: The Market, the Models and Regulation.

GSMA. https://www.gsma.com/mobilefordevelopment/wp-

content/uploads/2012/06/Philippines-Case-Study-v-X21-21.pdf

Legaspi, J.L., Galgana, I.L.O., & Hormachuelos, C. (2016). Impulsive buying behavior of millennials on

online shopping. National Business and Management Conference. Ateneo de Davao University.

Nartea, M.A., Santos, J.J.M, & Goyenechea, A.G. (2019). Exploring the characteristics of millennials in

online buying behavior. Asia Pacific Journal of Multidisciplinary Research, 7 (4), 1-9.

Pedroso K., (2015, July 26) More Filipinos choosing to shop online, study says. Retrieved from

http://business.inquirer.net/195931/more-filipinos-choosing-to-shop-online-study-says

Pineda M., & Bernhardsson L. (2011). The great learning experience project: An attempt to understand

learning from the views of the millennial learners.

Valencia, S., Bautista, R., & Jeong, L.S. (2021). Know Your Customers: How Generations X and Y Perceive

Mobile Payment. DLSU Business and Economics Review, 31(1), 16-28.

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