Digital trust key to MSME growth, IDfy says

Streamlining business verification and strengthening fraud prevention could help more Philippine micro, small and medium enterprises (MSMEs) access digital financial services and credit, according to identity verification company IDfy.

IDfy Philippines country head Raghuraman Chandrashekhar said outdated onboarding procedures, extensive documentation requirements and fragmented verification systems continue to prevent legitimate businesses from accessing financial services.

In an editorial contribution, Chandrashekhar argued that financial institutions must balance stricter fraud prevention measures with faster and more accessible merchant registration.

The call comes as digital payments continue to expand in the Philippines, with electronic transactions accounting for 64.7 percent of retail payment volume in 2025, according to the Bangko Sentral ng Pilipinas (BSP).

Despite growing digital adoption, MSMEs continue to face financing constraints. BSP data showed that bank lending to the sector reached P574.8 billion at the end of 2025, representing only 4.73 percent of total bank loans.

Chandrashekhar said the problem extends beyond limited credit availability, with traditional compliance procedures delaying or discouraging small businesses from entering the formal financial system.

At an industry roundtable co-hosted by IDfy and Mastercard, participants identified business document verification and compliance checks as priority areas for automation.

Fraud concerns also remain significant. Identity theft, forged documents, account takeovers and AI-generated deepfakes have increased the complexity of assessing merchant risks.

To address these challenges, Chandrashekhar proposed integrating automated identity verification, business ownership checks, digital document validation and continuous transaction monitoring into financial institutions’ onboarding processes.