GlobalData today announced that card payments in the Philippines are expected to post double-digit growth this year, as consumer spending continues to increase.
In a press release, the data and analytics firm said that card payments in the country are likely to grow by 10.1 percent to reach P2.5 trillion this year.
IMAGE CREDIT: www.visa.com.ph
“Cash has traditionally been the most popular method of payment among consumers in the Philippines, mainly due to its high unbanked population, inadequate banking infrastructure, and limited consumer awareness of electronic payments. However, following concerted efforts by the Filipino government and improvements in banking infrastructure, the country has seen a rise in card payments over the last few years,” said Kartik Challa, senior analyst for banking and payments at GlobalData.
”The Philippine government’s initiatives to support the economy and businesses, coupled with growing awareness of digital payments among consumers and a rise in consumer spending are all expected to further drive the country’s card payments market,” he added.
Challa also noted that last year’s 12.3 percent growth in card payments in the Philippines was supported by the economic recovery and higher post-pandemic consumer spending.
Kartik Challa, senior analyst for banking and payments at GlobalData
Card payments in the country to reach P3.4 trillion by 2027
GlobalData also issued a forecast stating that card payments in the country will continue to grow at a compound annual growth rate (CAGR) of 7.5 percent and could reach up to P3.4 trillion by 2027.
In 2022, there were 126 million debit cards in circulation in the country compared to just 10.9 million credit and charge cards.
When it comes to usage, however, consumers in the country preferred credit and charge cards, which accounted for 53.1 percent of the card payments value last year.
GlobalData attributed this to the installment payment option and reward programs offered by credit and charge cards.
While the Philippines’ card payments value declined by 5.6 percent in 2020 as the economy fell into a recession amid the COVID-19 pandemic, the card market posted a 10.9 percent growth in 2021 as the country’s economy recovered and consumer spending picked up.
Pandemic has accelerated the growth of non-cash payment methods in PH
GlobalData believes that the COVID-19 pandemic has aided the growth of non-cash payment methods in the country, as banks and merchants encouraged the use of digital payments to prevent the spread of the virus.
While card payments are back on a growth trajectory following the pandemic, GlobalData said high prices of goods pose a challenge as these affect household spending.
Last March, inflation slowed down to 7.6 percent from February’s 8.6 percent amid slower increases in food and transport prices.
The March inflation rate, however, is still faster than the four percent recorded in the same month last year.
In January, the Bangko Sentral ng Pilipinas (BSP) raised the interest rate on credit cards to three percent per month from two percent per month, making credit costlier.