Micro, small and medium enterprises (MSMEs) make up 99.5% of businesses in the Philippines. However, most still rely on informal financing and financing, which limits business expansion and leaves them vulnerable during economic downturns.
During the BusinessWorld Economic Forum 2026, titled “Advancing the ASEAN Agenda: Transforming Regional Vision into Business Action,” business executives and policymakers discussed the growing need to accelerate digital adoption among MSMEs as Southeast Asia pushes for deeper economic integration.
Among the participants was Paul Albano, general manager of GCash for Business, who highlighted how digitalization can help small businesses to increase market access and access formal credit systems.
Mr Albano said the low level of digital adoption today presents one of the biggest opportunities in the financial technology sector.
“Only 20 percent of MSMEs have used digital transactions, others do business with cash. That is the most bright opportunity for us at GCash, which is to help these MSMEs digitize their businesses. As they digitize, they will be able to move forward and drive growth in expansion,” he said.
Many businesses expanded during the violence as families sought alternative sources of income while travel restrictions disrupted traditional employment. Some entrepreneurs start selling products through social media and digital wallets, often using personal accounts, before moving on to formal business activities.
Mr. Albano said GCash has developed its business platform in part to respond to those changing trends. Many small business owners first use personal digital wallets to receive payments before they end up looking for the services of a legitimate merchant.
The company later expanded services from payment acceptance to comprehensive business tools including online payment systems, payment services, reporting functions, and access to borrowers.
In turn, digital payment systems accelerated after the pandemic, which changed consumer habits and pushed businesses toward contactless transactions.
Improving financial literacy and access to formal finance
Despite the widespread use of smartphones and strong digital payment adoption among consumers, financial literacy remains one of the major barriers preventing MSMEs from fully embracing digital operations.
As Mr. As Albano has seen, many small business owners are still afraid of internet scams and cybersecurity risks, which discourages them from investing.
“Many of these MSMEs do not want to go digital for fear of being cheated,” he said.
He noted that educational campaigns and merchant-focused financial education programs are still needed to help business owners understand how digital systems work and how to manage risks while expanding operations.
GCash for Business has expanded its services from QR-based payment collection to comprehensive merchant services including card payment terminals, online payment systems, payment services, and merchant management portals.
The company also offers payment devices that can process debit cards, credit cards, and QR Ph transactions, allowing merchants to accept multiple payment methods under one system.
“As businesses grow and are able to receive payments from their merchant fund, we are able to help them pay their bills and pay their employees,” he said.
Meanwhile, Mr. Albano said that about 80 percent of nano and small businesses do not have access to formal credit institutions. Limited documentation and the absence of regular credit histories often prevent small sellers from qualifying for bank loans.
Financial technology companies, such as GCash, now use transaction histories and payment behavior to check the creditworthiness of small merchants without banking relationships.
“We wish to expand [our service] by simplifying solutions for MSMEs, not just by catering to the acceptance of the primary payment, but by extending that to the full value chain, both inflows and outflows,” he explained.
Mr. Albano added that businesses switching from digital wallets to merchant accounts are creating workflows that could help companies develop alternative credit scoring models.
More than just finance
Mr. Albano said that GCash currently works with more than 700 local government units across the country. One important step involves digitizing transactions within traditional wet markets through the Paleng-QR system.
The initiative allows merchants to accept QRPh or scan to pay QR payments while paying suppliers digitally. Government officials and private sector partners have promoted the program as a way to boost trade in populous trading centers that have historically relied almost entirely on cash.
He explained that the level of cooperation between local governments determines whether programs are beneficial between market vendors and neighboring businesses, especially in communities where Internet connections are often inconsistent.
At the same time, digitization has increased opportunities to buy overseas among small businesses. Mr. Albano said GCash has integrated cross-border payment systems and funds that allow Filipino business owners to pay foreign suppliers and receive payments from abroad.
“Within GCash, we have an international business unit that can handle incoming and outgoing payments. Now, Filipinos can pay their suppliers abroad using GCash outgoings,” he explained. “GCash as a wallet facilitates receiving payments abroad through our partnerships with various outgoing funds and global bank transfer operators in more than 200 countries and regions around the world.”
In terms of sector resilience, small businesses remain among the most vulnerable during times of economic and political stress. Because of this, MSMEs often face tighter cash flow problems than larger companies, leaving them exposed during periods of rising prices and weak consumer demand. “We are working continuously on how to support MSMEs in this problem,” said Mr. Albano. “We are using the GCash ecosystem to figure out how to get the best deals from a supplier’s perspective,” he added.
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