Philippines Embraces BNPL Trend as Access to Credit Remains a Concern

Philippines Embraces BNPL Trend as Access to Credit Remains a Concern

by May 7, 2024

Credit and lending products including Buy Now Pay Later (BNPL) hold significant sway for a high number of Philippines citizens in pursuing their financial aspirations, with a staggering 96% acknowledging their importance, as per TransUnion’s Q1 2024 Consumer Pulse Survey.

However, access to credit remains a stumbling block, with only a third of respondents (35%) believing they have adequate access, marking a noticeable decline from 46% in Q1 2023.

The survey, conducted by global information and insights company TransUnion, delves into recent financial experiences and fraud encounters of consumers, shedding light on forthcoming financial trends.

Notably, Gen Z (aged 18–26) emerged as the cohort experiencing the greatest struggle with credit access, with only 32% feeling adequately served, followed closely by Baby Boomers (aged 59 and above, 30%), Millennials (aged 27–42, 28%), and Gen X (aged 18–26, 26%).

Harnessing the digital landscape, Gen Z Filipinos exhibit a tendency towards online transactions, with a massive 88% engaging in digital dealings in Q1 2024. Furthermore, another 89% of Gen Z respondents anticipate an income surge in the coming year, surpassing all other generations.

Fuelled by tech proficiency and optimistic financial outlooks, Gen Z leads the charge in embracing BNPL services in the Philippines, a credit-enabled payment mode allowing fixed instalment payments over a short period.

Among BNPL-aware Filipinos, a significant 63% reported at least one transaction in the past year, up from 61% in Q1 2023. Within Gen Z, this figure surged to 65%, marking the highest increment among all generations.

Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion

Weihan Sun

Reflecting on this trend, Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion, noted,

“For many Filipinos, Buy Now Pay Later services offer financial convenience and flexibility, tailoring payment terms to suit their needs. As usage surges, stakeholders must fortify underwriting systems to meet the expectations of a digitally adept demographic.”

Moreover, credit monitoring witnessed a rise, with 70% of Filipinos checking their credit reports monthly, up from 65% in Q1 2023. Millennials (75%) and Gen Z (74%) led this trend, underscoring a growing awareness of credit health implications.

Addressing the scourge of fraud, phishing emerged as the top tactic, reported by 49% of respondents targeted by online, email, phone call, or text messaging scams. While fraud remains a concern, younger demographics exhibit heightened vigilance, with only 28% of Gen Z Filipinos unaware of fraudulent attempts, down from 37% in the previous year.

Sun emphasised,

“As technology evolves, so do payment options and fraud risks. Proactive fraud prevention and consumer education are imperative for financial institutions to thrive in the digital era.”