World Card Intelligence

E-commerce fuels growth in Filipino cards market


Home » Newsroom » E-commerce fuels growth in Filipino cards market

E-commerce fuels growth in Filipino cards market

6 December 2013, London: The e-commerce market is gaining popularity in the Philippines, with more consumers willing to purchase online and using their financial cards for online payments, according to a new report by London-based Lafferty Research.

The Philippines is still largely a cash-dominated society, with about 90 percent of transactions in 2012 settled in cash. However, there has been a marked increase in the usage of cards for payment, encouraged by aggressive promotions by issuers. Given the expanding size of the middle class, there is considerable potential for growth in the Filipino payment cards market. Several merchants have partnered with online payment service providers, such as PesoPay and PayPal, to accept debit and credit card payments and electronic transfers, in addition to traditional payment methods such as cash on delivery. Growth in e-commerce is also identified as a major factor in the significant increase in the billed volume of transactions made on payment cards.

The Lafferty report also found that — although the Philippines is a relatively undeveloped market in terms of credit card penetration — a number of factors indicate that the market is developing in terms of competition, including differentiation of products and further segmentation of customers. The financial cards market remains unregulated in terms of interest rates and fees incurred. Despite this lack of regulation, keen competition imposes a consistency across issuers' services, membership fees, interest rates, minimum required balance and the application requirements for different types of cards. Banks use even slight changes in fees as a factor to attract new customers as well as to encourage existing customers to remain loyal and increase cards usage.

"After a contraction in the profit pool for two consecutive years, the credit cards market in the Philippines has been on a growth phase since 2010, along with the recovering economy. Net interest revenue remains the main source of income due to high rollover rates and interest rates," says Sisi Liao, Head of Group Research at Lafferty.

Prepaid cards are popular in the Philippines largely due to the large unbanked segment. Many banks offer prepaid cash cards to serve the financial needs of Filipinos who do not have a bank account. The number of open-loop prepaid cards, which can be used in multiple outlets like credit and debit cards has been growing faster than the number of closed-loop cards (whose use is typically restricted to one merchant), and there is still room for growth.

Notes for editors

Lafferty Group provides advanced knowledge services to the financial industry worldwide, including research reports, management reports, peer group councils, research databases and publications.

For further information contact:

Ronan Lynch
Director, Global Knowledge Centre
Tel: +44 (0) 20 3008 8415


Recent market updates:

  • Japan
  • Hong Kong
  • Lebanon
  • Canada
  • USA

  • Unique databases, case study-based market intelligence reports, plus essential industry news:

  • Cards and Payments
  • Digital Payments