A new survey reveals increasing popularity of in-store financing as payment options, comparable to credit cards while gadgets are still the top gift choice for Christmas.
In a country where only 5 percent of the population has a credit card, it’s no surprise that cash is still the top mode of payment. But what might come as a surprise to some is that credit cards are no longer the only popular alternative to cash.
The new alternative? In-store installment financing, which is seeing a fast increase in adoption from Filipino shoppers hungry for 0-percent interest deals along with easy and fast approvals.
A recent study by consumer finance company Home Credit Philippines reveals the increasing preference for installment financing in the Philippines, showing it to be the second top choice for payments among respondents when shopping, next only to cash, and slightly ahead of credit cards.
According to the survey conducted in one of the country’s biggest malls, 80 percent of the total respondents will pay in cash if they have enough budget or resources, while 11 percent will apply for a financing/installment loan, followed by credit cards (9 percent).
While the rankings for payment options may have changed, shoppers’ gift buying (and gift receiving) preferences remain the same. Almost half or 39 percent of the respondents—including married and single men and women—cited gadgets as their most preferred gifts this Christmas season, followed by appliances and cash. On the other hand, 38 percent prefer to give their loved ones shoes and clothing as presents for the holidays.
For single respondents, there were striking similarities in preferred gifts, with both males and females opting to receive high-tech gadgets as Christmas presents.
The study reveals that 32 percent of married respondents preferred Christmas gifts that would be more useful in the household. Majority are inclined to receive appliances (32 percent), followed by gadgets (29 percent), from their loved ones this Christmas.
With most of the respondents typically buying gifts through full cash payments, more than half of all respondents allocate a budget of almost a fifth of their monthly salary for gifts, with some even allotting almost half of their total monthly income for shopping.
While shoppers have different gift preferences and spending habits, consumer finance groups such as Home Credit help many Filipinos purchase gadgets and appliances through convenient and affordable payment terms—thus freeing up more of their budget during the expense-heavy holiday season.
“The preference for gadgets doesn’t come as a surprise, considering the increasing smartphone and internet penetration in the Philippines. And when it comes to purchases, budget is always a consideration, even more so during the holidays,” says Annica Witschard, chief executive of Home Credit Philippines.
“This is where consumer financing services such as ours can help. Through installment financing options, especially the 0 percent interest offerings, Filipinos can have a much easier time in managing their budgets—so they have more than enough budget left for Noche Buena and other holiday activities,” Witschard says.
Home Credit Philippines offers affordable loan installments for gadgets, appliances and other electronics in over 1,500 stores of 220 retail partners across key cities and provinces such as Metro Manila, Cebu, Pampanga, Batangas, Cabanatuan, Baguio and Iloilo. Since it was established in the country in 2013, Home Credit has already served over 500,000 customers.
“Our aim is for greater financial inclusion in the Philippines, and we at Home Credit are focused on offering affordable loan installments that can help consumers,” Witschard says.