Industry leaders call for smarter verification, continuous risk monitoring and alternative data to expand access to finance
Manila, Philippines — As digital payments continue to gain ground across the Philippines, financial institutions must rethink how they verify, protect and extend credit to the country’s millions of micro, small and medium enterprises (MSMEs), industry leaders said.
The call came during The Anatomy of Merchant Trust, an executive roundtable co-hosted by IDfy and Mastercard in Manila, where leaders from banking, fintech and payments discussed the infrastructure needed to bring more small businesses into the formal digital economy.
The discussion comes as consumer adoption of digital payment channels continues to accelerate. According to Bangko Sentral ng Pilipinas (BSP) data, QR Ph adoption has surpassed 57 percent. But while consumers are increasingly comfortable with digital payments, industry leaders noted that the infrastructure supporting small merchants has not always evolved at the same pace.
For many micro and small businesses, the challenge begins with proving who they are.
Traditional merchant verification remains fragmented, particularly at the micro-business level. This can create broader trust and risk challenges across the financial ecosystem, encouraging institutions to apply rigid risk policies that may unintentionally exclude legitimate businesses that lack conventional credit histories.
Industry leaders said addressing this gap can complement government efforts to help small businesses become more digitally capable.
Programs such as the Department of Trade and Industry’s (DTI) Tindahan Mo, e-Level Up Mo! have helped equip thousands of sari-sari store owners and other small merchants with digital literacy and cashless payment tools. The next step, leaders said, is ensuring these newly enabled businesses can access formal financial services without being slowed down by outdated onboarding processes.
Replacing paper-based checks and physical audits with automated, risk-based verification could help banks and fintechs onboard merchants more efficiently while maintaining appropriate safeguards.
The importance of this area was reinforced by internal polling conducted during the roundtable. Business document verification and compliance checks emerged as the highest-priority workflow for automation among participating executives, receiving a score of 4.4 out of 5.
But trust does not end when a merchant is approved.
As more businesses participate in digital commerce, industry leaders highlighted the need to move from one-time verification toward continuous risk management. Real-time behavioral analytics and ongoing fraud monitoring can help institutions identify threats such as document forgery, deepfakes and post-approval misuse while minimizing 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.”
The conversation also extended to one of the biggest challenges facing MSMEs: access to credit.
Financial institutions are increasingly turning to alternative data, including digital payment records, utility payments and transaction footprints, to better understand businesses that may not have traditional credit histories.
Combined with progressive lending models that allow credit limits to increase as merchants demonstrate growth, alternative underwriting could help 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.”
Ultimately, industry leaders agreed that expanding financial inclusion requires more than giving merchants access to digital payment tools. It requires an ecosystem that can verify legitimate businesses efficiently, continuously protect them from emerging threats and use better data to help determine their ability to access credit.
By strengthening these foundations, the financial sector can turn risk management from a barrier into an enabler of opportunity, allowing more Philippine MSMEs to participate securely and confidently in the digital economy.
For more information on the roundtable discussion, visit www.idfy.ph.