CCAP@36: Advocating fair and responsible lending through the years
In today’s modern world, the use of credit cards has revolutionized the way consumers pay for goods and services. Credit cards provide the unique advantage of saving time and trouble when a person does not have enough cash on-hand — or even provide quick cash advances should the need arise. It also helps users keep track of expenses since credit card companies provide monthly billing statements. For frequent users, card companies and merchants offer appealing incentive programs such as discounts, rebates, freebies and reward points based on the spend requirement, as well as other features like dual currency billing, Automatic Debit Arrangement (ADA) for bills payment, free lounge access and a concierge service.
The wide acceptance of this form of payment has led to the growth of the credit card industry, and with it came the need for an organizational body that seeks to maintain closer cooperation among credit card companies and to foster fellowship in the attainment of mutual and common interests.
To fulfill this vacuum, the Credit Card Association of the Philippines ( CCAP) was born. In an effort to have a better understanding of the organization’s role, The
Philippine STAR sat down with CCAP president Biboy Gomez as he discussed how the organization fulfills its mandate of informing the public about credit management, foster discipline among consumers, and eventually guide the credit card industry towards self-regulation.
The birth of CCAP
Thirty-six years ago, on October 7, 1980, a group of representatives from American Express, Bank of America, Diners Club, Equitable Bank, PCI Bank, Pacific Card and Manila Banking Corporation met at the El Comedor Restaurant in Ermita, Manila, to talk about the formal creation of the CCAP. Shortly after, CCAP’s incorporation papers were submitted to the Securities and Exchange Commission and the organization was incorporated on January 6, 1981.
Now 36- years- strong, CCAP initiates measures that protect both cardholders and merchants, as well as encourages the responsible use of credit cards in the local, global and e-commerce sphere. CCAP has been spearheading efforts to promote wider ownership and acceptance of credit cards as a safe, reliable and beneficial payment instrument that will enhance the purchasing power of consumers, thus contributing to the economic development of the country.
At the forefront
Today, the organization has grown to include 15 member card companies offering branded credit cards, namely, Asia United Bank (AUB), Bank of Commerce, Bank of the Philippine Islands ( BPI), Citibank N. A., China Banking Corporation ( Chinabank), East West Banking Corporation (East West), Equicom Savings Bank ( Equicom), Hongkong and Shanghai Banking Corporation ( HSBC), Maybank Philippines, Inc. (Maybank), Metrobank Card Corporation ( Metrobank Card), Philippine National Bank (PNB), RCBC Bankard (RCBC), SB Cards Corporation ( Security Bank), Standard Chartered Bank and Union Bank of the Philippines (Union Bank).
“CCAP has been at the forefront of its main advocacy, which is to promote fair and responsible lending. In pursuing industry actions around this advocacy, our board of directors and various management committees composed of representatives from member banks or credit card companies regularly meet to agree on important undertakings around such advocacy and to
monitor progress. While CCAP is not a governing body with a regulatory authority, we, as members, all collaborate in putting in place selfregulating mechanisms to ensure that as an industry, we abide by common principles that redound to fair and responsible lending,” explains CCAP president Biboy Gomez. Towards greater f inanc ial inclusion
CCAP supports financial inclusion as an important pillar in nation building. Credit cards, being a convenient financial product for everyday purchases and payments as well as a revolving consumer credit facility, are important entry products for the general public to gain access to the financial system. Access to transaction accounts like these is a great first step towards broader financial inclusion since it opens the gateway to other financial services.
“To promote wider ownership, the main thrust of the association is public education especially on the convenience and security of using credit cards for daily transactions both locally and overseas. We feature important information in our website and Facebook pages on the benefits of owning a credit card, keeping credit card transactions secure, maintaining good credit history, and adhering to relevant BSP regulations that safeguard the rights of both the customers, credit card issuers and merchant acquirers. We should be cognizant, though, of the importance of a sustainable credit card industry growth, so while each member bank has its own customer acquisition strategy, CCAP has built capabilities to enable our members to evaluate credit worthiness through credit data sharing, either through our internal database or a third- party credit bureau. This way, our members may be able to target customers aided by historical credit history to mitigate credit risk,” highlights Gomez.
The IDR P : promoting responsible credit
As much as credit cards can bolster financial health by building and rebuilding credit, the haphazard use of it can lead a person down to the rabbit hole of bottomless debt. But for some, credit dilemma began with unforeseen circumstances that are beyond control, like sickness or death in the family, sudden unemployment, the death of the primary bread winner, or accidents and natural calamities. To help these individuals, CCAP, with support from the Bangko Sentral ng Pilipinas (BSP), has initiated the Inter- Bank Debt Relief Program ( IDRP), a relief program that will allow financially distressed ( but well- meaning) customers to restructure their existing debts and get back on track towards responsible credit use.
“One important program is the Inter- bank Debt Relief Program ( IDRP), which we launched in June with the full support of the BSP. The IDRP is an industry- wide debt restructuring program which aims to assist our credit card customers who, unfortunately, have fallen on bad times through unforeseen life events such as extended medical expenses, reduced income from business, and loss of assets due to calamities. Consequently, they find themselves having difficulty paying their credit card obligations. Through this program, we made financial recovery f rom a customer’s total and consolidated credit card outstanding balance more probable through affordable payment schemes, which may come in the form of lower interest rate and/ or reduced equal monthly amortization over a reasonable tenor. In addition, we made the process of application easier by enabling a single point of negotiation through a lead bank against the current practice wherein our customers have to approach each credit card issuer to apply for debt restructuring and ending up with multiple payment terms and conditions. In the near term, we are looking at institutionalizing a single payment capability that will allow our customers to pay a single amount through a single channel based on an agreed restructuring amount,” discusses Gomez.
Active link between government and industry
Keeping its vision, CC AP remains a dynamic enabler that leads the cards industry towards sustainable growth through upholding interests of member banks. Gomez says, “In promoting wider acceptance, CCAP enables merchant acquisition of nontraditional institutions such as the government and micro- businesses and in conducting merchant education on best practices to keep credit card transactions secure. Through the association’s Merchant Acquiring Committee composed of representatives from each member bank, we are in the process of partnering with said institutions as a collective effort. Furthermore , for existing merchants, we regularly conduct onsite training of personnel on best practices and provide them materials that they can refer to for security information.”
Ever the active force, CCAP today engages in cooperative and collaborative efforts with government agencies. “The BSP and CCAP conduct a quarterly consultation meeting on vital regulations that affect the industry. We are thankful for this opportunity since it provides a venue for CCAP to present and discuss our position on proposed regulatory releases. The recently enacted Republic Act 10870, otherwise known as the Credit Card Industry Regulation Law, was an important piece of legislation that we have been working on with our regulators. This is important to us because RA 10870 is a comprehensive law that governs the credit card industry in a comprehensive way to achieve a regime that is generally transparent, equitable, and beneficial to all stakeholders in the credit card industry,” Gomez expounds.