Philippines to Remain Southeast Asia’s COD Leader as Digital Payments Grow

 

The Philippines is expected to retain one of Southeast Asia’s strongest dependencies on cash-on-delivery (COD) payments through 2027, despite accelerating adoption of digital payment methods, according to fintech company Xendit.

The country’s continued reliance on cash highlights a significant divide in the region’s e-commerce landscape, where consumers are increasingly shopping online but are not adopting digital payments at the same pace.

In Xendit’s E-commerce Payments Momentum Report, developed with market intelligence firm Cube, COD accounted for approximately 23 percent of e-commerce transaction value processed through Xendit’s Philippine platform. This was the highest proportion among the six Southeast Asian markets covered by the report.

While COD is projected to represent less than a quarter of regional e-commerce sales value in 2027, the Philippines is expected to remain among the few markets where the payment method still accounts for more than 20 percent.

Xendit Philippines head of go-to-market Ina Gatan attributed the slower transition to the country’s substantial cash-dependent consumer base, gaps in banking access and persistent concerns about the safety of online transactions.

The shift away from COD is already underway, but consumer behavior suggests that the transition will not happen uniformly. Xendit head of marketing Valerie Cai estimated that the Philippines could bring its COD share below 20 percent within the next couple of years, although she acknowledged the uncertainty surrounding the timeline.

Consumer trust remains a barrier to digital payments

The report surveyed 6,000 online shoppers across six Southeast Asian markets, including 1,000 respondents from the Philippines.

Among Filipino participants, 33 percent said they used COD considerably less frequently than they did a year earlier. However, 12 percent said nothing would persuade them to stop using the payment method, a proportion roughly twice as high as that reported in most neighboring markets.

These findings suggest that expanding digital payment adoption requires more than simply making cashless options available. Consumers must also feel confident that their money and transactions are protected.

Discounts and cashback offers emerged as the strongest incentives for Filipinos to switch to digital payments. However, Xendit emphasized that dependable refund processes and stronger payment security would also be essential to sustaining consumer confidence.

Regulatory changes, wider access to payment services and evolving shopping habits are expected to influence how quickly the country moves toward a more cashless e-commerce environment.

QR payments and bank transfers gain momentum

Digital payment channels are already recording substantial growth in the Philippines.

Transactions involving QR codes and bank transfers increased by 198 percent between January 2025 and April 2026, driven largely by the growing use of QR Ph and InstaPay.

QR Ph accounted for approximately 13 percent of e-commerce transaction value on Xendit’s platform, demonstrating the growing role of interoperable QR payments in online shopping.

E-wallet transactions, meanwhile, grew by a more modest 3 percent during the same period. Xendit attributed the slower expansion partly to the established presence of digital wallets in the Philippine market, where they already account for a significant share of online payments.

The figures point to a changing mix of cashless payment options. Rather than relying on a single platform, consumers are increasingly gaining access to different ways of completing online purchases.

Cross-border shopping remains an untapped opportunity

Beyond domestic transactions, Xendit identified international e-commerce as another area with considerable room for expansion.

The Philippines recorded an estimated 9 percent cross-border share of e-commerce sales in 2026, placing it near the bottom among the regional markets examined. Only Indonesia, at 6 percent, had a lower share.

Other markets posted higher proportions, including Singapore at 19 percent, Thailand at 15 percent, Vietnam at 14 percent and Malaysia at 12 percent.

Xendit projected that cross-border e-commerce across Southeast Asia could expand by 11 to 19 percent annually through 2030. The pace will depend on regulatory developments and improvements in payment connectivity, which can make international transactions easier for both merchants and consumers.

For the Philippines, stronger cross-border payment infrastructure could help local shoppers access more international sellers while enabling domestic businesses to reach customers in other markets.

Southeast Asia’s e-commerce market set for further expansion

The broader regional outlook reinforces the importance of improving payment systems as online retail continues to scale.

Southeast Asia’s e-commerce market was estimated at $197 billion in 2025, a substantial increase from approximately $3 billion in 2012. Cube expects the market to surpass $400 billion by 2031 as a growing share of consumer spending shifts online.

For the Philippines, capturing more of this growth will depend not only on the expansion of online marketplaces but also on addressing the practical barriers that keep shoppers tied to cash.

The country's next phase of e-commerce development will require a combination of accessible payment options, reliable consumer protection and greater confidence in digital transactions. Until these conditions become more widespread, COD is likely to remain an important part of the Philippine online shopping experience, even as cashless payments continue to gain ground.