Following the COVID-19 pandemic, the Filipino card payments market is on the road to recovery supported by economic revival and a rise in consumer spending. The country’s card payments market is expected to register strong growth of 11.6% in 2022 reaching PHP2.2 trillion ($44 billion), found GlobalData, a leading data and analytics company.

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “The pandemic adversely affected most global economies and the Philippines was no exception. The economic uncertainty caused by the pandemic forced consumers to cut down on spending, which affected the card payments market, especially the credit and charge card markets.”

Economic growth in the Philippines contracted in 2020, with the country’s GDP registering an annual decline of 9.6%. However, with economic activities gaining traction during 2021 following the easing of COVID-19 restrictions, GDP has increased by 5.6% in 2021. The government also rolled out financial measures to lessen the impact of COVID-19 on its citizens and businesses in the form of stimulus packages. Improving economic activities will have driven consumer spending, which in turn will support overall payment card market growth. GlobalData forecasts that the Philippines’ total card payments value is forecast to grow at a compound annual growth rate (CAGR) of 9% between 2021 and 2025 to reach PHP2.8 trillion ($55.7 billion) in 2025.

According to GlobalData’s report, ‘Philippines Cards and Payments: Opportunities and Risks to 2025’, the value of credit and charge payments declined by 16.2% in 2020 while debit card payments registered a slow growth of 3.6%. The Filipino government’s timely measures to control the outbreak and the pace of vaccinations helped businesses to quickly reopen.

Sharma continues: “Cash has traditionally been the most popular method of payment among consumers in the Philippines mainly due to the high unbanked population, inadequate banking infrastructure, as well as limited public awareness of electronic payments. However, following concerted efforts by the government and improvements of banking infrastructure, the Philippines has seen a rise in card payments in the last few years. Although COVID-19 has affected the payments industry due to a decline in overall consumer spending, the pandemic has also highlighted the importance of non-cash payment tools which will boost electronic payments.”

With the lockdown restrictions now eased and the economy recovering, card payments are expected to grow rapidly. The debit card payment value is set to register a 12.4% growth in 2022, while the credit and charge card payment value will grow by 11% during the same period.

In a bid to promote credit card adoption, the Filipino government passed a new law on credit card interest rates in September 2020. The new law capped the interest rate on credit cards at 2% per month (or 24% annually) compared to the previous average annual rate of 42%. The law also capped the interest rate on credit card instalment plans at 1% per month. This initiative has helped boost credit card adoption and usage. The number of monthly credit card applications increased by 175.1% in June 2021 to around 646,000 applications, up from 235,000 applications in June 2020, according to Bangko Sentral ng Pilipinas.

Sharma concludes: “The Filipino payments card market, which was affected by the pandemic, is on a recovery path and is anticipated to continue its uptrend, supported by a revival in economic conditions.”