POS loans set to soar in the Philippines with 91% openness, projecting a ₱1.67 trillion market surge by 2028.

Point-of-sale (POS) loans in the Philippines are expected to be worth ₱1.67 trillion by 2028, based on data from UnaCash, an instalment solutions provider. This is supported by a recent poll that found 91% of local market consumers would consider adopting this financing option.

91% of consumers in the local market are willing to use POS loans as a financing option, based on the company’s study. Based on data from the Bangko Sentral ng Pilipinas (BSP) and the Philippines Statistics Authority (PSA), household consumption accounts for around 72.8% of the nation’s economic activity.

Moreover, from ₱1.968 trillion in March 2022 to ₱2.291 trillion in the same month in 2023, consumer loans have increased by 16.4%. 52% of those who obtained more credit did so primarily to pay for necessities. Education came in at number twelve and company startup or expansion at number twenty-four percent.

Furthermore, households utilised 3% of their personal consumption loans to pay for consumer products. In order to close the cash gap required to maintain their standard of living, local households take in an average of 55% of their own consumption through point-of-sale purchases.

POS loan

The POS finance industry’s steady ascent

The financing option has achieved great popularity in the local market, according to an UnaCash poll of 137 respondents from its online community regarding the attitude of Filipino consumers towards point-of-sale (POS) financing. Indeed, seventy percent of internet buyers said they used at least one POS financing option.

Notably, the availability of POS financing was highlighted by 22% of online and 33% of offline buyers as a critical factor affecting their decision to shop in physical or virtual establishments.

A number of elements became clear as decisive variables when deciding between online and physical purchasing. The following factors were emphasised for consumers who were in-store:

  • wish to examine the merchandise in person (41%).
  • customised experience for customers (40%)
  • Prevent shipment delays (34%).

On the other hand, internet users gave priority to:

  • 50% of the accessibility and convenience offered by e-commerce platforms
  • variety of options for purchases (40%).
  • payment flexibility, comprising possibilities for POS financing (37%).
  • the ease of having services delivered door-to-door (37%).

Examining electronic payments

There is a tendency for POS financing solutions that the report also highlights. Thirty-one percent of online and forty percent of offline shoppers use short loans disbursed to e-wallets. When it comes to credit card instalments, traditional buyers are more favoured than internet ones (16% against 10%). While thirty percent of online customers used buy now, pay later (BNPL) alternatives, only eleven percent of offline buyers took advantage of in-store POS credit offers.

Filipino customers understand the benefits of POS financing, in line with the BSP’s more comprehensive market statistics. According to the survey, even when their income is sufficient to cover the item’s full price, the majority of respondents (42%) said they preferred the POS financing option since it allowed them to spread the cost of purchase over time.

Out of interest, 34% of customers gave this service a try. In the meantime, 24% of respondents said that this choice is in favour of closing the income inequality gap.

In order to extend the cost of their purchases over time and free up more cash for other expenses, 65% of respondents said they would use POS alternatives for future purchases. However, because they have limited incomes and cannot otherwise buy the things, 24% are likely to use POS financing alternatives for future purchases. Therefore, in the near future, market expansion is probably going to be driven by robust consumer demand.

A promising future for the POS financing industry

Although inflationary pressures are expected to stay high through 2023, nominal income growth is expected to exceed inflation, ensuring real income growth for consumers and increasing their inclination to spend more.

Fitch predicts that from 2023 to 2028, consumer spending in the Philippines would increase at an average annual rate of 5.9%. Additionally, as challenges to the Philippine economy grow and as global monetary conditions stabilise, it is anticipated that the central bank would maintain its hold on basic rates through 2024.

Based on favourable macroeconomic circumstances, growing consumer spending power, rising degrees of digitalization, and increased financial inclusion, UnaCash projects that the Philippines’ point-of-sale (POS) financing sector would continue to expand at the same pace as it did in the years after the epidemic.

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