CEBU CITY, Philippines — A restaurant in Mandaue City managed customer payments using multiple QR codes displayed on its counter—one for each bank—while the owner manually recorded sales in a blue notebook.
While digital payments had made transacting easier, what happens after remains unresolved and continue to cut into profits, especially for many micro, small and medium enterprises (MSMEs) in Cebu.
Fragmented payment systems, where collections, reconciliation and bookkeeping are handled separately across multiple platforms, can erode five to 15 percent of operational productivity or revenue opportunities for small businesses, according to experts.
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That image captures a problem spreading quietly across Cebu’s small business sector: the shift to digital payments is generating new operational costs that many micro, small and medium enterprises (MSMEs) were not prepared for.
For those still heavily reliant on manual processes, the indirect cost runs even higher, said Rose Escudero, country head of HitPay Philippines.
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Fragmented payments
Digital payments already accounted for 57.4 percent of total monthly retail transactions in 2024, up from 52.8 percent in 2023, based on data from the Bangko Sentral ng Pilipinas (BSP).
Yet the infrastructure costs of going digital remain under-examined, particularly for smaller operators running on the thinnest margins.
While 77 percent of Filipino MSMEs are eager to adopt digital tools, only 16 percent currently use them, a separate report from global consulting firm Boston Consulting Group (BCG) showed.
For those that have made the leap, the experience has exposed multiple operational inefficiencies that erode the savings digital payments were supposed to deliver.
Escudero said the problem often starts with how businesses collect payments in the first place.
“The inefficiencies take several forms: delayed reconciliation, human errors, duplicate work, missed or mis-recorded transactions, inventory mismatches and slow cash-flow visibility,” she shared with CDN Digital in an interview.
MSMEs vulnerable
MSMEs are especially vulnerable to higher transaction costs and longer settlement times than large corporations, conditions that lock up liquidity and hamper growth.
Furthrmore, a delayed payout not only means inconvenience but can also disrupt supplier payments, payroll, and restocking cycles that run on razor-thin timing, explained Escudero.
Likewise, small businesses are the most exposed to fraud.
While about 93 percent of Cebu MSMEs are willing to adopt digital payments, around 70 percent still cite security and fraud concerns, according to a study from researchers led by the Cebu Institute of Technology & University (CIT-U).
Additionally, sticking to limited payment channels carry its own costs, which is a reality for most small enterprises in Cebu.
In a city heavily dependent on tourism like Cebu, that kind of missed sale is not an isolated incident.
The Philippine Institute of Development Studies (PIDS) pointed out that MSMEs account for about 99 percent of businesses in the Philippines.
But payment complexity has long limited their ability to sell abroad.
“Without a unified payment partner, businesses lose repeat customers due to hassle, expose themselves to staff leakage and miss out on higher-value purchases… The cost of not acting is already there — it’s just harder to see,” Escudero said.
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