Although the pandemic has paved the way for the rise of electronic payments, the lockdowns imposed by the government are taking a big toll on the local credit card industry.
A key official in the business revealed to Newsbytes.PH said those severely affected are sales in merchant stores, online booking and fine dining, which comprise to about 65 percent of the total credit card portfolio in the Philippines.
Prior to pandemic, the top goods acquired through cards included laptops, smartphones, tablets and appliances. An estimated P320 million worth of these items are purchased in Metro Manila a month using credit cards, according to BusinessWorld data released in June 2021.
Metro Manila, which comprises 16 cities and one municipality, is still under modified enhance community quarantine until Sept. 7, 2021.
Authorities in the banking and credit card industry said the prolonged MECQ is unfavorable to most businesses as it mandates all restaurants, fine dine or fast foods, are disallowed from accepting customers.
Authorities said the prolonged quarantines, unless will be lifted totally effective Sept. 8, is very bad for the credit card industry. They said the ECQs of MECQs will be very crucial as these will surely affect the forecast for the credit card industry this year until 2024.
According to GlobalData’s Payment Cards Analytics, card payments in the Philippines will grow by 15.4 percent in 2021. This forecast means a total of P2.1 trillion will be paid through credit cards. It is forecasted to register a compound annual growth rate (CAGR) of 12.3 percent between 2020 and 2024 to reach P2.8 trillion in 2024.
“The Philippines is among the worst affected countries by the Covid-19 pandemic, with the economy falling into recession. The market scenario is now changing with the opening of businesses and vaccine distribution gaining pace. Gradual revival in economic conditions is expected to drive growth in the country’s card market,” GlobalData said in a statement.
Other authorities said the payment holiday imposed starting last year that aimed to help ease burden for credit card holders is another burden for the industry.
The Credit Card Association of the Philippines, the group of 14 credit card-issuing banks in the country, is now careful in approving applications to avoid excessive credit exposure.