At 7 million actual holders of credit cards, the usage or penetration of plastic money by Filipinos is still significantly below that of its neighbors in Asia, mainly because Filipinos are still averse or allergic to credit cards. This makes the Philippines one of the least leveraged countries in terms of household debt.
This was the observation of Alex Ilagan, Executive Director of Credit Card Association of the Philippines (CCAP), as it celebrated its 35th founding anniversary at the Hotel Intercontinental.
Though the CCAP considers the prudence of Filipinos as a “big competitor to credit cards” still this is more positive for us because our “biggest enemy is bad debt,” Ilagan said.
The growth of the credit card industry has been at 5 percent a year and this is because aside from being prudent, Filipinos who have had bad experiences with credit card fraud and thefts have shied away even more from getting such plastic money, said Ilagan.
There are currently 12-member banks that offer credit cards to augment their lending portfolios. The newest entrants are Asia United Bank and China Bank, Simon Calasanz, CCAP Chairman said.
The industry has been proactively addressing issues on credit card thefts and frauds, in close collaboration with the Bangko Sentral ng Pilipinas, which lately required the adoption of the EMV (European Master Visa) standards, considered the most stringent and safe worldwide for cardholders.
In terms of savings depositors of 30 million people, the credit card holders of 7 million is still way below but with some banks now offering debit cards (which function like credit cards except that they are backed by savings deposits), there has been some shift in consumer behavior with some feeling their way into acquiring credit cards eventually, explained Harrison Gue, CCAP President from the Metrobank group.
Calasanz said the credit card sector could have grown faster had it been backed by a national identification card system — for easier access to customer demographics, which had taken so long to materialize, lagging even behind Africa, which now has a national ID.
As to the future trend of credit card, Gue said in the not too distant future, the industry would be adopting the contactless technology, especially for point of sales transactions, to ensure against card and data fraudsters.
Although the credit card bill was passed in 2009, the implementing rules and regulations defining the parameters, operations and data sharing among the industry players and allied sectors have yet to be passed, thereby leaving the industry alone to police its ranks, Ilagan said.
Aside from the absence of a national ID system, the industry also bewails the poor logistics infrastructure, particularly the postal system, which results in delayed deliveries of balance statements of cardholders, resulting in disgruntled clientele who end up withdrawing from the credit card system, Calasanz said.
Around 35 percent of mall sales are actually done through credit card while the bulk is still through cold cash, Gue added.
Manila Bulletin, March 23, 2015