Bangko Sentral ng Pilipinas Deputy Governor Chuchi Fonacier expects a sustained increase in the use of credit cards as the economy recovers from the impact of the global health crisis.
Fonacier listed positive developments that could trigger the further use of credit cards of Filipinos during the 43rd anniversary of the Credit Card Association of the Philippines (CCAP) Friday.
“The positive macroeconomic prospects provide the backdrop for robust spending. Despite the higher inflation and interest rates, the latest BSP surveys showed a more upbeat outlook for Filipinos for the next quarter and beyond due to higher jobs, security of tenure and higher income from remittances and other sources,” Fonacier said in an online briefing.
She cited the latest labor force survey showing that the unemployment rate declined to 4.4 percent in August from 5.3 percent a year ago. Remittances also grew 2.5 percent in July year-on-year.
“These developments have translated to an upbeat loan demand from consumers. Household loan demand, for one, increased due to higher consumption and more attractive bank financing terms,” Fonacier said.
“These bode well for Filipinos who use credit cards for their daily purchases. The credit card industry in the Philippines remains in a strong position,” Fonacier said.
CCAP chairperson Magdalena Surtida said that since 2022, consumer spending on travel and dining out was still on the rise, as people who longed to see family and friends during the lockdown were now doing so, and with a vengeance.
“As for business travel, we have not yet seen it go back to its pre-pandemic level as business meetings can still be conducted online,” Surtida said.
Surtida reported that as of end-June 2023, the industry generated P619 billion worth of credit card receivables, 29 percent more than in the same period last year. Year-to-date, the industry has seen card spend increase by 39 percent to P853 billion.
Cards-in-force grew modestly at 14 percent to 12.2 million cardholders as credit card issuers wanted to maintain a healthy industry past due of 4 percent which is at the same level as year-to-date June 2022.
“For 2024 and beyond, we expect to harness the power of AI [artificial intelligence] and other new technologies to help us further on fraud detection. We also see more use cases of doing credit card transactions and credit card account management via apps to promote self-service, enabling our cardholders to have more control over one’s credit card account,” Surtida said.
“We also see more use cases for tokenization, not just to deter fraud, but to deliver a more seamless credit card payment journey with merchants while enjoying personalized services. With these, cardholders can expect more value for money, more flexibility, and more options to enjoy rewards points…,” Surtida said.
CCAP is the umbrella organization of 17 credit card issuers.
CCAP earlier expressed full support to the decision of the Bangko Sentral ng Pilipinas to retain the existing ceilings on credit card transactions to give consumers continued access to credit card financing.
The maximum interest rate or finance charge on the unpaid outstanding credit card balance of a cardholder remained at 3 percent per month or 36 percent per year.
The monthly add-on rates that credit card issuers can charge on installment loans were maintained at a maximum rate of one percent.
Meanwhile, the maximum processing fee on the availment of credit card cash advances stayed at P200.00 per transaction. The ceilings on credit card transactions are subject to review following a six-month period.
