Mastercard sees rising credit card use

CREDIT CARD USE IS EXPECTED TO PICK UP next year as the easing global economic crisis prompts more Filipino consumers to spend.

Jose Rene Villareal, country manager of Mastercard, said credit card-funded consumption in the Philippines had managed to sustain growth, albeit at a slower pace, despite the hard times. He expects conditions next year would be better for businesses and credit card companies, as growth in consumption is seen to accelerate.

Villareal said the tough economic conditions forced some people to defer “discretionary” spending this year, but they have maintained the use of credit cards for “nondiscretionary” spending. Nondiscretionary spending covers basic goods, including food and clothing, while discretionary spending involves nonessentials.

Basic goods accounted for the bulk of the things purchased and paid for through credit cards.

Plastic money was used heavily in buying clothes and grocery items, he noted.

“This is the reason why, whether there is a crisis or not, credit card use continues to grow in the Philippines,” he added.

Villareal said that by next year, consumption of nonessentials might increase, thereby accelerating the growth in credit card use.

“Growth in consumer spending will go back to normal levels next year after it has been depressed a bit because of the crisis,” Villareal said at the sidelines of an economic forum held yesterday in Makati and organized by Mastercard.

Consumption grew by 2.2 percent year-on-year in the second quarter, faster than the 0.8 percent in the first quarter but still anemic compared with the over 5-percent levels seen last year.

Economic managers said the decelerated growth in consumer spending was brought about by higher propensity of households to spending, exercising caution against the potential effects of the global crisis on employment.

However, they likewise said growth in consumption would be faster in the months ahead as reports about gradual recovery of the global economy from the turmoil injects confidence among consumers. –Michelle Remo, Philippine Daily Inquirer