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Plastic Money 101

Oscar Navidad
Cards Corporate Sales
EastWest Bank
History of Credit Card
• Frank Namara and Ralph Schneider started first payment charge
card with different merchants for travel and entertainment thru
Diners Club in 1950
• American Express card came in 1958
• Bank of America introduced BankAmericard in 1958 which is
considered to be the modern credit card with revolving credit,
BankAmericard eventually evolved to what is now known as Visa
• In 1966, a group of banks formed Master Charge to compete with
BankAmericard and later became known as MasterCard
• In the Phils, Bankard was introduced in the 1982 under PCI Bank
(Phil Bank of Commerce) , Bankard is now known as RCBC Bankard
• 2.7 Billion Cardholders Worldwide by 2015 per Global Industry
Analyst Inc.
Source: Wikipedia, prweb.com and RCBC Bankard Website
World Wide Credit Card Brands

Japan Credit Bureau China Union Pay

The Credit Card Industry in the Phils
• There are about 15 credit card companies in the Phils.
• 7 million cardholders which is 18% of the 37.8 Million
working population
• Gross billings of Php 210 Billion (Jan – June 2013)
• Accounts receivables of Php 156 Billion (Jan – June
• Average of 5.76% past due rate (Jan – June 2013)
• Accredited merchants of 126,569
• Total credit card employees of 4,069
• The industry is regulated by Bangko Sentral ng Pilipinas
and Credit Card Association of the Phils
Source: NSO and industry sources
Credit Card Companies in the Phils
CCAP member banks
BPI Citibank
EastWest Bank Equicom Savings Bank
HSBC Maybank
Metrobank PNB / Allied Bank
RCBC Bankard Security Bank
Standard Chartered Bank Unionbank

Non - CCAP member banks

BDO Bank of Commerce
Types of Credit Card Companies

• Issuer – issues credit cards to the general

public, evaluates credit card standing of all
applicant according to their financial capacity

• Merchant Acquirer – sets-up and manages the

point of service payment system and
merchant network for credit card use
Types of Plastic Money
• Credit Cards – unsecured /non-collateralized
loan, revolving credit line, can be paid over
time or in installment
• Debit Cards – secured credit line linked to a
bank deposit account, outright payment and
charges are debited from the deposit account
• Pre-paid Cards – loadable cards not linked to
any bank account but purchased as a stand
alone card
Plastic Money
Credit Cards

Debit Cards

Pre-paid Cards
General Classification and Income / ADB / Load
Requirements of Plastic Money
Credit Cards Income Requirement
Classic Cards Minimum of at least P 120,000 per year
Gold Cards Minimum of at least P 480,000 per year

Platinum Cards Minimum of at least P 1 Million per year

Debit Cards ADB Requirement

Depending on the bank and Range of P 2,000 – P 20,000 and up
type of deposit account

Pre-paid Cards Maximum Load

Depending on the bank and Maximum load of P 100,000 at any given time
type of deposit account restriction imposed by BSP to avoid money laundering
Target Market for Plastic Money
• 21 – 64 years old
• First time Cardholders or Existing Cardholders
of other banks
• Employed / Self-employed
• ABC cardable markets
• With annual income of atleast P 120,000
Application Requirements
• Application Form
• Income documents such as ITR, Certificate of
Employments, one month payslip, credit card
statement, bank statement, Business
Registration / Permit
• Photocopy of valid IDs with picture and signature
• Alien Certificate of Registration, Visa , work
permit, if foreigner
• With landline
• Within business trading areas
General Features of Plastic Money
Interest Rate for Credit Cards 1.99% - 3.5% (effective rate of 23% - 42% per annum)
Fees Credit Cards: Free on First Year and P 1,000 – P 6,000
Annual Membership Fee for 2nd year onwards
Debit Cards: With Minimum Average Daily Balance
Pre-paid: One time Fee of P 0 – 100 for the card and
applicable reloading fees

Rewards Points Credit Cards: 1 pt for every P 30 – P100 spent

Perks and Instant Promos Credit Cards and Debit Cards: discounts on certain retail
upon usage and food establishments, freebies based on minimum

Minimum Amount Due Credit Cards: 3- 5% of outstanding due

General Features of Credit Cards
Credit Card Features
Global Acceptance Worldwide wherever MasterCard/VISA is accepted

Installment Facilities Enjoy as low as 0% interest installment in 6, 12, 18 or 24 easy payment terms
at participating merchants
Cash Advance Facility: Get cash advances of up to 30% - 70% of the credit limit at any ATM, over-the-
counter at any accredited bank nationwide or at any ATM displaying the
MasterCard, Cirrus, VISA and VISA Plus logos

Billings and Payments in All your purchases, whether local or abroad, shall be paid in Philippine Peso to
Philippine Peso allow you to keep your foreign currency intact
Payment Convenience: • Over-the-counter through the following authorized payment centers:
accredited banks, supermarkets, departments stores, courier services, 24/7
mini groceries, pawnshops, among others
• Electronically through ATMs
• Online through Online Websites
• Auto-debit through any deposit product/s

Quick Bills Facility Take advantage of the most convenient way to pay for utility and
telecommunication bills, insurance policies, among others. Via auto charge
How do Banks Earn?
Revolving Interest * 1.99% - 3.5% (effective rate of 23% - 42% per annum)
Cash advance fees* 1% - 5% or P 200 – P 500 per transaction whichever is higher

Cash advance over the counter* P 200 – P 500 per cash advance
Overlimit Fees* P 300 – P 500 per billing cycle
Foreign Currency Conversion* 2.5% on converted amount upon posting of transaction
Gaming and Gambling Fee* 3.5% service free on gambling and gaming transactions
Late Payment Charge* 5% up or up to P 600 whichever is higher

Installment Pre-termination Fee* P 500 - P 1,500 or 5% of the remaining balance whichever is higher

Deposit Requirement ADB Requirement,then money is invested or loaned to other entities

For Debit Cards

Reloading Fee and usage Amount varies per bank and depending on type of transaction
For Pre-paid Card

* For Credit Cards

Benefits of Plastic Money
• Payment convenience, worldwide acceptance
• Risk mitigation against theft or hold-up
• Consumer protection
• Monitoring and control
• Credit line, grace period (billing cycle) and
terms for credit cards, specially for business
• Perks, rewards points, cash back, discounts
and promos
Disadvantages of Plastic Money
• Fraud (credit card disputable, debit and
prepaid card outright loss)
• Debt trap, uncontrolled usage or misuse
• Hidden cost or fees
Economic Impact of Card Payments

The impact of electronic payments on economic growth by Moody’s
Economic Impact of Card Payments

The impact of electronic payments on economic growth by Moody’s
Economic Impact of Card Payments

The impact of electronic payments on economic growth by Moody’s
Economic Impact of Card Payments

The impact of electronic payments on economic growth by Moody’s
Credit Card Handling Tips
• Use your Credit Card wisely - it is a powerful
financial tool if used properly, responsibly and
with discipline
 for needs and not wants
 for convenience & savings and not excuses
 for business and not vices
 for emergencies and not lifestyle exigencies (e.g. sale, gadgets,
keeping up with the neighbors, etc.

• Always pay on or before the due date

 to avoid paying penalties or unnecessary charges
 to maintain a good credit standing
 to avoid calls from collection agencies or law offices
Credit Card Handling Tips
• Stay within your means
 don’t use it excessively, it should serve you and not the other way
 maintain financial discipline in using the card within your paying /
income capacity

• Protect your credit card/s

 keep a record of your card number or account details and your credit
card’s contact numbers in case the credit card is stolen or gets lost
 never give your credit card details to strangers and unauthorized
users / providers
 keep your card in a safe place and always keep your card within your
insight when paying to avoid card fraud
Credit Card Handling Tips
• Limit yourself to one or two credit cards
 so you can monitor or manage your credit card use more efficiently
and effectively

• Use the credit card that offers the lowest

interest rate and charges but the longest credit
 in case you need to revolve your outstanding balance/s, you will not
be heavily burdened paying high interest rates and charges

• Never “share” or “lend” your credit card to

your friends or relatives
 “Pakisabay or suyo naman sa card mo, bayaran ko na lang pag may
pera na ako….” Kailan yun?
Credit Card Handling Tips

• Know yourself and know your credit card

 know your card usage threshold / limit
 allocate a credit card use budget every month base on your payment
budget , ideally not more than 20% of your monthly income
 read the fine prints of your credit card: due date, fixed charges,
basis for computing the interest, etc.
 keep your credit card balance/s low
Oscar Navidad
AVP & Head,Cards Corporate Sales
Credit Cards and Unsecured Loan Sales
Consumer Lending Cluster
EastWest Bank
Email: j_navidad@eastwestbanker.com
Direct line: 575-3398
Mobile: 0999-8851470

Thank you