Blog and Updates
The Missing Piece of Philippine Digital Payments
Offline payments may solve the last-mile problem
By: Phyra Templeton
Digital Transformation
Opportunities
Merchants
A fisherfolk in Tawi-Tawi has just offloaded her morning catch at the wet market, and she opens her e-wallet to pay the ice supplier standing beside her.
The screen spins…and spins some more. The payment is settled in cash, traceable only by memory. This is a structural reality that hits home for millions of everyday Filipinos.
Why is this still an issue? Because digital payments in the Philippines are designed on the assumption that the internet will always be there.
Except now this assumption has met its match in a one-minute video from Swedish fintech company, Crunchfish. And the implications for the Philippine economy could be vast.
Crunchfish, a deep fintech company specializing in offline payments, has released a Person-to-Merchant (P2M) demo video that shows something deceptively simple: a transaction via a QR code. No Wi-Fi, no loading spinner.
The payment goes through right away once connectivity is restored, with full confirmation on both ends.
This is thanks to a patented architecture called Layer-2 capability. Here’s how it works:
Before going offline, the user's wallet is pre-funded, with reservations held in regulated accounts under an existing ledger. Since the offline layer only manages the capability for offline spending, money doesn't move but is reserved under central bank authority.
An offline payment is initiated by the payee through a payment request presented to the payer. The transaction is validated locally, creating a digital IOU; a verifiable promise backed by a pre-authorized reserve.
Once connectivity is restored, all offline transactions sync automatically with the central ledger. Settlement only happens after online verification, eliminating manual reconciliation and disputes.
In an archipelagic country of 7,000+ islands, today’s digital payments in the Philippines are fractured and still heavily rely on consistent internet connectivity.
And to truly understand why Crunchfish’s offline tech matters here more than almost anywhere, you need to sit with the contradictions at the heart of Philippine finance.
In 2013, digital transactions represented just 1% of all payments. By 2024, that number reached nearly 60% driven by a wave of digital banks and e-wallets.
While this leap in digital financial infrastructure is impressive, it cannot be called inclusive just yet. Metro Manila’s median mobile download speed is 63.33 Mbps, while economically active regions like Visayas still run 42% slower.
And as of mid-2025, 464 municipalities, largely in Visayas and Mindanao, were reported to not have a bank presence in places that are most reliant on agriculture, fisheries, and remittances.
On top of financial exclusion, there is the matter of natural calamities. The Philippines, situated in the Pacific Ring of Fire and along the Pacific Typhoon Belt, is host to its fair share of disasters. This often leaves millions without connectivity for weeks on end.
The Philippines’ Primary Sector is the economic backbone of rural Philippines, with agriculture accounting for 10% of the country’s Gross Domestic Product (GDP) and employing around 23% of the national labor force.
However, these industries are plagued by deeply inefficient payment chains that technology has failed to reach.
Payments are routinely delayed (3-7 days) and settled through informal verbal agreements with no digital record. Postharvest losses reach up to 40% in agriculture and 38% in fisheries.
These losses cost the Philippine economy PHP 20-30 billion annually across major agricultural regions alone. Offline digital payments change this completely. Fisherfolk in Palawan can receive an instantly verified digital payment at the dockside, no signal required.
Offline Layer-2 payments give every sari-sari store, palengke stall, and small trading post the ability to accept digital payments without needing reliable internet.
The BSP's "test-and-learn" Regulatory Sandbox Framework is actively inviting financial innovation of exactly this type. Offline payment access for MSMEs represents one of the highest-impact applications that framework could enable.
For a decade, the dominant strategy for Philippine financial inclusion has been to ‘get more people online, and financial access will follow.’
It is a reasonable strategy and has produced real results, but it remains fundamentally incomplete for a nation of 7,641 islands, 20 typhoons a year, and 464 municipalities where the nearest bank branch is nonexistent.
The Crunchfish demo video is less than a minute long. But what it represents is the first credible, regulatorily viable answer to the question that has been hanging over Philippine fintech for years: What happens to digital money when the signal dies?
The answer is nothing, because the money keeps working.
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