Stronger merchant verification and risk infrastructure can help businesses move from digital adoption to greater financial access
Manila, Philippines — Digital payments are becoming increasingly accessible to Philippine businesses, but industry leaders say the next challenge is ensuring that micro, small and medium enterprises (MSMEs) can translate digital participation into broader access to financial services, credit and growth opportunities.
This was among the key takeaways from The Anatomy of Merchant Trust, an executive roundtable co-hosted by IDfy and Mastercard in Manila, bringing together leaders from banking, fintech and payments to discuss the barriers affecting merchant onboarding and financial inclusion.
According to Bangko Sentral ng Pilipinas (BSP) data, adoption of digital payment channels such as QR Ph has surpassed 57 percent. Yet for many small merchants, particularly micro-enterprises, entering the formal digital economy remains challenging.
The issue is often not a lack of willingness to adopt digital tools, but the difficulty of proving legitimacy within systems designed around more established businesses.
Traditional merchant verification can be fragmented and dependent on documents and processes that are difficult for smaller businesses to navigate. When institutions have limited visibility into a merchant’s identity and business activity, they may rely on broad risk policies that can inadvertently exclude legitimate businesses without conventional credit histories.
Industry leaders said modernizing merchant onboarding can help close this gap.
Government programs such as the Department of Trade and Industry’s (DTI) Tindahan Mo, e-Level Up Mo! have already helped thousands of small merchants develop digital skills and adopt cashless payment tools. More efficient onboarding can help these businesses take the next step by connecting them to formal financial services.
Automated, risk-based verification can reduce reliance on legacy paper checks and physical audits while helping institutions make faster and more informed onboarding decisions.
During the roundtable, internal polling showed that business document verification and compliance checks were the highest-priority workflow for automation among participating executives, scoring 4.4 out of 5.
But leaders emphasized that merchant trust must continue after approval.
Real-time behavioral analytics and continuous fraud monitoring can help institutions identify risks such as document forgery, deepfakes and post-approval misuse, while reducing unnecessary friction for legitimate merchants.
“Merchant trust is no longer a one-time verification exercise—it is a continuous lifecycle,” said Raghuraman Chandrashekhar, PH Country Head of IDfy. “As digital payments scale across the Philippines, institutions must move away from fragmented onboarding and adopt intelligent, risk-based systems that unify identity verification, alternative data, and real-time monitoring. The future of financial inclusion depends on enabling MSMEs to be onboarded quickly and safely at scale.”
Better merchant data can also improve access to credit.
Digital payment records, utility payments and transaction footprints can give financial institutions additional insight into businesses that may not have traditional credit histories. Combined with progressive lending models that increase credit limits as merchants grow, alternative underwriting could unlock formal financing for more than one million underserved merchants nationwide.
“Merchant trust extends well beyond onboarding. As more businesses participate in the digital economy, the industry needs to strengthen collaboration across banks, payment providers, fintechs, and technology stakeholders,” said Jason Crasto, Mastercard’s Country Manager for the Philippines. “Each stakeholder brings unique capabilities, perspectives, and expertise to the table. Through stronger public-private collaboration, shared intelligence, and advanced risk solutions, we can build a more secure, scalable, and inclusive digital ecosystem that empowers Philippine MSMEs to grow with confidence.”
For industry leaders, the next phase of financial inclusion will require more than expanding payment adoption. It will require the infrastructure to verify businesses efficiently, protect them continuously and give lenders better information to support responsible access to capital.
For more information on the roundtable discussion, visit www.idfy.ph.