The Cost of Credit Card Fraud in the Philippines

Credit card fraud is becoming an increasing concern in the Philippines, mirroring global trends as digital transactions gain traction. The country’s efforts towards cashless payments have brought significant benefits, but it has also opened new avenues for fraudulent activities. As card usage continues to rise, so do the risks associated with financial fraud, making it essential to understand the market and implement robust security measures.

The growth of card payments and fraud

In recent years, the Philippines has seen a substantial increase in card payment transactions. In 2023, these transactions were valued at approximately 2.9 trillion Philippine pesos, and forecasts suggest this could reach 3.4 trillion pesos in 2024. This surge is largely driven by changing consumer behaviours favoring non-cash payments and the government’s push toward a cash-lite economy. However, this rapid digitalisation also creates opportunities for cybercriminals to exploit security vulnerabilities.

As digital transactions become more common, fraud attempts are following suit. A survey conducted in Q4 2023 revealed that 50% of Filipinos who encountered digital fraud attempts were targeted through phishing attacks. Additionally, 42% reported being victims of smishing, where fraudulent messages are sent via SMS to steal personal and financial information. These tactics highlight the need for increased vigilance among consumers and strengthened security measures by financial institutions.

A global issue with local implications

Credit card fraud is not a problem unique to the Philippines. Globally, card fraud losses increased by more than 10% between 2020 and 2021, marking the largest rise since 2018. In 2021 alone, worldwide losses due to card fraud reached over 30 billion U.S. dollars. While the Philippines faces its own unique challenges, the broader global trends suggest that this issue requires proactive and ongoing attention.

Why the Philippines is vulnerable to credit card fraud

One key factor contributing to the vulnerability of the Philippine market is the low penetration of credit cards. As of January 2021, less than 3% of Filipinos aged 15 and above owned a credit card. While this presents an opportunity for growth in the sector, it also means that many consumers may lack experience in recognising and handling fraudulent activities. First-time users are more susceptible to scams, making financial literacy and awareness crucial in combating fraud.

Additionally, the accelerated adoption of digital payments, particularly during the COVID-19 pandemic, has created a double-edged sword. While digital transactions offer convenience, they also expose users to cybersecurity threats, particularly those unfamiliar with best practices for safeguarding their personal and financial data. Many Filipinos embraced digital banking and mobile wallets for the first time in recent years, but without adequate security education, they can become easy targets for fraudsters.

Efforts to combat credit card fraud

To address these growing threats, financial institutions and regulators are taking action. The Philippine government is actively promoting financial inclusion, ensuring that banking and payment services reach underserved areas. Through the use of micro-banking and electronic money issuers, consumers can access financial services while receiving education on safe banking practices. By improving financial literacy, authorities aim to equip the public with the knowledge needed to recognise and avoid fraud.

Traditional banks, digital banks and card issuers are also strengthening security measures. Many institutions now provide EMV-compliant cards, which offers a higher level of security against fraudsters who attempt to clone magnetic stripe cards. These technological advancements are critical in reducing fraud risks and ensuring safer transactions for consumers.

Public awareness campaigns are another essential tool in fighting fraud. Raising awareness about common fraud schemes, such as phishing and smishing, helps individuals recognise suspicious activities and take precautionary measures. Educational initiatives, social media campaigns and warnings from banks and financial institutions all contribute to a more informed public that is less likely to fall victim to fraudulent schemes.

While the Philippines is making significant strides toward a digital economy, the rise in credit card fraud underscores the importance of proactive security measures. Financial institutions, regulators and consumers must work together to strengthen fraud detection and prevention strategies.

To learn more about fraud detection, check out How AI in Banking is Reshaping Security in Payments.