Financial and technology leaders highlight onboarding, fraud prevention and alternative data as foundations for greater inclusion
Manila, Philippines — The Philippines’ next wave of micro, small and medium enterprise (MSME) growth could depend on how effectively the financial sector can identify legitimate merchants, manage risk and extend access to capital, industry leaders said.
At The Anatomy of Merchant Trust, an executive roundtable co-hosted by IDfy and Mastercard in Manila, executives from banking, fintech and payments explored the gaps preventing many small businesses from fully participating in the country’s increasingly digital economy.
Digital payment adoption has expanded rapidly, with Bangko Sentral ng Pilipinas (BSP) data showing that QR Ph adoption has surpassed 57 percent. But the growth of digital payments has also highlighted the need to modernize the systems used to onboard and protect the businesses accepting those payments.
For many MSMEs, particularly micro-enterprises, merchant verification remains fragmented. Businesses without extensive documentation or conventional credit histories can face difficulty proving their legitimacy, even when they have genuine operations and strong growth potential.
Financial institutions, meanwhile, face their own challenge: limited visibility can translate into higher perceived risk. Without reliable data and efficient verification processes, institutions may rely on broad risk policies that unintentionally exclude businesses that could otherwise qualify for financial services.
Leaders at the roundtable said stronger onboarding infrastructure could help resolve this disconnect.
Government initiatives such as the Department of Trade and Industry’s (DTI) Tindahan Mo, e-Level Up Mo! are already helping small merchants develop digital capabilities and adopt cashless payments. Streamlining merchant onboarding could help ensure that digital adoption translates into broader participation in formal financial services.
Automated, risk-based verification could reduce reliance on legacy paper checks and physical audits while allowing financial institutions to make faster and more informed decisions.
This was reflected in internal polling during the session, where executives ranked business document verification and compliance checks as the top workflow requiring automation, giving it a score of 4.4 out of 5.
But access must be balanced with protection.
As merchants become more digitally active, fraud risks can evolve beyond the initial onboarding process. Continuous monitoring and real-time behavioral analytics can help financial institutions identify suspicious activity, including document forgery, deepfakes and misuse occurring after approval.
“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 opportunity extends beyond payments to credit.
Many small businesses have limited traditional credit histories, making it difficult for lenders to assess them using conventional models. Alternative data—including digital payment records, utility payments and transaction footprints—can provide additional signals of business activity and financial behavior.
Progressive lending models can further build on this information by allowing credit limits to grow as merchants demonstrate sustained activity and expansion. Combined, these approaches 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 opportunity is to rethink risk not as a reason to keep small businesses out, but as a framework for bringing more legitimate merchants into the financial system safely.
With stronger onboarding foundations, continuous fraud intelligence and more inclusive credit assessment, the financial sector can help more Philippine MSMEs move from simply participating in digital payments to accessing the tools and capital they need to grow.
For more information on the roundtable discussion, visit www.idfy.ph.