SUMMER vacations in the West are traditionally known as a sales slump for merchants. However, this couldn't be further from the truth in the Philippines, as retailers see record purchases during the hotter, dryer season. While the Philippines has a healthy local retail market, consumers are rapidly turning to going online to bring in overseas goods.

Ever since the Covid-19 pandemic, Filipinos have swiftly embraced online shopping, with growth rates surpassing all other markets in Southeast Asia. Recent figures reveal the Philippines' total e-commerce sales are expected to reach a staggering $24 billion by 2025. Now looking at a compound annual growth rate of 9 percent, the Philippines' e-commerce sector is evidently benefiting from a stronger post-pandemic economy and an increased desire for global brands. Roughly half of the more than 70 million online users in the Philippines now order goods online from overseas, with food and beverage accounting for a fifth of these cross-border purchases.

In isolation, this growth is eye-catching for the business community. But the patterns of purchase point to a more interesting trend. Filipinos' shopping habits spike between the holiday season of November and December and then again between March and May — the height of the Philippines' summer.

Years of rigorous data-tracking show the Christmas period, which is much longer compared with other nations' festive periods, stands out as the pinnacle of shopping enthusiasm. The summer season between March and May is meanwhile underpinned by Easter as well as scores of local festivals, including the Aliwan Festival, the Philippines' largest and grandest national celebration. The Philippines' countless holidays give locals an excuse to shower their loved ones with gifts and celebrate in style.

Also fueling this e-commerce surge is the Philippines' internet usage. Smartphone penetration now stands at 80 percent, and Filipinos are now spending over nine hours a day online, trailing closely behind other emerging markets like Brazil and South Africa. Young people ages between 10 and 24 now account for almost a third of the Philippines' population. It is this demographic that has grown up with the internet and smartphones and for whom e-commerce will become ubiquitous.

However, despite the Philippines' e-commerce surge, consumers and retailers still face a shortage of digital payment systems, especially those which are interoperable with overseas platforms.

Amid growth in financial technology solutions and e-wallets, traditional payment methods like cash on delivery (COD) still hold sway in the Philippines. Around 44 percent of the country's bankable population — those ages 15 and older — is considered unbanked, especially in rural areas. The country's banking penetration rate is low compared with its Southeast Asian neighbors and other emerging markets.

To bridge this gap, the World Bank advised the Philippines' Government to make efforts to expand access to financial services, including leveraging digital payments. This seems the natural step as rural Filipinos are more likely to have access to a smartphone than a physical bank.

Some steps in the right direction have been taken, such as the government's Project Nexus, a model for connecting national payment systems into a cross-border platform. For a nation that's highly dependent on overseas remittances, this is a crucial development in bringing cheaper and seamless transactions over the Philippines' border.

Meanwhile, the Association of Southeast Asian Nations (Asean) is negotiating to bring a region-wide interoperable payments infrastructure. If agreed, this should bring a huge boost to cross-border e-commerce and digital finance. A harmonious and interoperable regional payments system will eradicate compatibility challenges for Filipino businesses and Southeast Asian merchants looking to sell online in the Philippines. Successful growth will set the region up to become a thriving digital economy and expand its successful e-commerce market.

As the Philippines' financial technology landscape advances technologically, e-commerce businesses will have a ripe opportunity to join in the nation's festive fun, whatever the season and whatever the payment platform.

Joaquin Moreno is the head for Asia-Pacific at dLocal, all-in-one cross-border payments connecting global merchants to emerging markets.

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