Card payments in the Philippines, which witnessed a -7.4% slump in 2020, are all set to rebound strongly with 15.4% growth in 2021, with a gradual recovery in consumer and commercial spending, forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Payment Cards Analytics, the value of card payments in Philippines is forecast to register a compound annual growth rate (CAGR) of 12.3% between 2020 and 2024 to reach PHP2,872.5bn (US$56.5bn) in 2024.

Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “The Filipino card payments market, which registered a robust growth during the last few years, have been affected by the economic downturn due to the COVID-19 pandemic. However, the market scenario is now changing with the revival in economic conditions and vaccine distribution gaining pace, which in turn will positively impact the country’s card market.”

According to the Philippines Statistics Authority, the country’s GDP contracted by 9.5% in 2020. With the opening of businesses and easing of lockdown restrictions, the economy is expected to revive in 2021 with expected GDP growth rate between 6.5%-7.5%.

While the Philippines is a cash-based economy, government has been taking various initiatives to increase card penetration and usage. In September 2020, it passed a regulation to cap credit card interest rate at 2% per month (or 24% annually), effective from 3 November 2020, compared to the average annual rate of 42% previously. This move is expected to further push credit card usage.

Banks and payment companies are also playing a key role in promoting card usage and drive consumption during the pandemic. In March 2021, American Express in partnership with Banco de Oro launched its Shop Small movement, encouraging consumers to shop at smaller local merchants.

Another new trend in the Philippines is the entry of digital-only banks. Neobank Tonik launched services in March 2021 while a Singapore-based financial services company DigiBankASIA is running a pilot to launch digital-only bank UNObank.

Mr Reddy concludes: “The COVID-19 pandemic has hampered the Philippines card payments market, which is in a development phase. In a country with over 60% unbanked population, the entry of digital-only banks will complement traditional banks in pushing the card adoption and usage. In addition, favorable government regulations, promotional campaigns by banks and payment companies, and improving financial awareness are bound to help the market to grow further during the next four years.”