Wallets in crisis mode: BNPL’s rise among Filipino consumers amid a war-torn quarter

By Isa Jane D. Acabal, Researcher

EVEN BEFORE payday arrives, Arlene L. Roberto, already budgets her husband’s wages.

The 38-year-old housewife allocates money for rent, utility bills, and other household expenses to cater to their three children.

But when oil prices soared, the plastic factory where her husband works scaled back operations, reducing workdays and overtime hours. The cuts shrank his take-home pay, putting even more pressure on the family’s already tight budget.

“He used to never take days off, but now he’s been given a day off, so he has fewer workdays. Our budget, which used to at least be enough, now falls short,” Ms. Roberto said in an interview.

For Jacinto John Tan, Jr., a 34-year-old food delivery rider, every spike in fuel costs directly affects his daily earnings, most of which is now spent on gasoline.

“It is heavy in the pocket,” he said in an interview.

The outbreak of the Middle East war at the end of February triggered higher global oil prices and supply chain disruptions, exposing import-dependent countries like the Philippines to heavy inflationary pressures.

In an off-cycle meeting in March, the Bangko Sentral ng Pilipinas (BSP) kept the key policy rate at 4.25%. In April, the central bank raised borrowing costs by 25 basis points to 4.5% to anchor inflation expectations.

Meanwhile, inflation accelerated to 4.1% in March, mainly driven by the year-on-year increase in the transport index, according to the Philippine Statistics Authority.

Consumer price index further accelerated to a three-year high of 7.2% in April amid elevated oil prices.

To supplement the family budget, Ms. Roberto used to take on side jobs, including online selling and supplying items for retailers. However, she lost her capital when the COVID-19 pandemic hit.

With limited options, she said she sometimes turns to loans or buy-now-pay-later (BNPL) services, provided by digital finance platforms like Atome and Billease, to make ends meet.

Ms. Roberto previously used GCredit, a service offered by e-wallet GCash. She currently uses Atome mainly for groceries.

She said she usually spends her credit in the hard discount supermarket chain DALI to save more on grocery expenses.

“If you will use it for groceries or other essentials, make sure your target limit is what you can actually afford to pay at each cutoff,” she said.

Ms. Roberto said, BNPL helps her stay afloat by covering gaps in their family’s budget.

As a food delivery rider, Mr. Tan also turns to BNPL services when he runs out of budget for gasoline.

He said he uses Atome, and the BNPL features of Shopee and TikTok for products.

BNPL VS TRADITIONAL CREDIT
For consumers like Ms. Roberto and Mr. Tan, BNPL services have become a common fallback, but they differ from traditional credit in structure, cost, and repayment terms.

“Unlike other credit products, BNPL usually provides consumers with a clear repayment plan upfront, including the number of installments and payment dates,” Asia United Bank (AUB) President Manuel A. Gomez, told BusinessWorld in an e-mail.

He said this structure helps users track spending easily and lessens uncertainty around repayment obligations.

“BNPL is also more embedded into digital commerce experiences, allowing consumers to access financing seamlessly during checkout rather than through a separate loan application process,” Mr. Gomez added.

On the same note, Georg Steiger, chief executive officer and co-founder of Billease, said in an e-mail that the “clarity, combined with the convenience of being embedded directly at the point of purchase, is a big reason adoption has been so rapid, particularly among younger and first-time borrowers.”

Christian Quiros, president and general manager of Atome Philippines, said applying for BNPL services is faster compared to traditional credit, with less documents required.

“The financial terms are structured differently from a credit card… Our tiered micro-spending limit model starts users at controlled amounts and increases limits only through demonstrated repayment behavior” he said in an e-mail.

He also noted BNPL underwriting differs from traditional credit as providers continuously assess risk and monitor accounts after signing up.

FILLING THE CREDIT GAP
Demand for BNPL and short-term digital credit products are growing steadily, especially among younger and more digitally active consumers, Mr. Gomez said.

“Compared with previous years, consumers are becoming more intentional in how they use credit. Instead of relying on large traditional loans, many users prefer smaller, manageable installment-based financing that aligns with their monthly cash flow,” he said.

They are also seeing stronger adoption of BNPL services in everyday spending categories like essentials, education, healthcare, travel, and e-commerce.

Meanwhile, Mr. Steiger said there is a clear, structural shift instead of a cyclical one for BNPL demand in the country.

“BNPL in particular has moved well beyond aspirational purchases; it has become part of how households budget, smooth cash flow, and stay in control of their finances,” he said.

He also highlighted BNPL’s role in expanding financial inclusion among consumers underserved by traditional banks.

“What stands out most is the growth among first-time credit users, many of whom would never have qualified for a traditional credit card,” Mr. Steiger said.

Data from the 2025 Consumer Finance and Inclusion Survey of the BSP showed 50% of Filipino adults owned a formal financial account, down from 56% in 2021.

This was partly driven by fewer loan-linked accounts held with microfinance nongovernment organizations and cooperatives, aligning with lower loan incidence in these institutions.

Food delivery rider Mr. Tan once had a savings account in a traditional bank. However, like many low-income Filipinos, he often had to dip into his savings to cover daily expenses.

Meanwhile, housewife Ms. Roberto once kept their family’s money in a traditional bank, but the pandemic drained their savings.

She has since chosen not to reopen an account, saying she would rather put her money into a business instead.

“In the near future, if we have extra money and once my husband change jobs, I might open a savings account again. But I think it is better to use the money for business, since it would just sit in the bank and would be reduced by taxes,” she said.

According to Atome Philippines’ Mr. Quiros, roughly 80% of their cardholders are first-time credit users, with the Atome card being “the first formal financial product they have ever qualified for.”

He also noted growing usage of BNPL services to finance consumers’ daily essentials.

“Across our 2.5 million cardholders, the top spending categories are groceries, utility and telco bill top-ups, food, and e-commerce — the recurring costs of a Filipino household,” he said.

Likewise, Billease’s Mr. Steiger have also observed BNPL products “being used to bridge timing gaps for essentials like groceries, school fees, and utility bills.”

“What this tells us is that BNPL is evolving from a payment convenience into a real financial resilience tool. We treat that as a responsibility as much as an opportunity when used well, BNPL can be the difference between a household staying current on the basics and falling into more expensive forms of informal credit,” he said.

ECONOMIC IMPACT
The growing use of credit for everyday expenses exposes households to new financial pressures, economists said.

“When households begin using credit to fund basic consumption, it signals rising financial stress. This type of borrowing does not generate income and can quickly erode household resilience,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said in an e-mail.

“In a geopolitical shock — such as the Middle East conflict that pushes oil and food prices higher — these households become more vulnerable to defaults,” he added.

Jose Ramon G. Albert, senior research fellow at the Philippine Institute for Development Studies (PIDS), said when consumers use credit to finance daily essentials, the central risk is that “the underlying obligation generates no future income or asset to repay it, unlike borrowing for a productive purpose.”

“Geopolitical tension compounds this from both sides. Oil-driven inflation and a weaker peso erode real household budgets faster than wages can adjust, pushing more basic spending onto credit,” he said in an e-mail.

Mr. Albert said that when households stack BNPL plans across providers, it becomes “structurally harder” for them to return to saving.

“When households have to finance recurring, nondiscretionary spending rather than one-off or productive purchases, it is a signal that day-to-day cash flow is no longer balancing on its own, and that the post-pandemic recovery and remittance flows have not fully translated into household resilience,” he added.

Mr. Albert said BNPL and other digital lending services have expanded financial inclusion and supported consumption that underpins gross domestic product growth.

However, when consumers rely on credit for everyday essentials, “the growth it supports is essentially borrowed from future demand and is highly sensitive to any shock,” he said.

Sharing the same sentiment, Mr. Asuncion said BNPL and digital lending increase the risk of over-indebtedness at the household level, “especially when borrowers take on multiple small loans without full visibility of total obligations.”

“At the macro level, these platforms can support consumption in the short term, but if credit growth outpaces income growth, it raises broader financial stability concerns,” he added.

Going forward, Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa sees consumption to be challenged.

“Households would need to grapple with managing built up loan balances while still finding a way to cover basic necessities against surging inflation and now much more elevated borrowing costs,” he said in an e-mail.

BNPL users, Ms. Roberto and Mr. Tan, said they are aware of risks associated with the service, including security concerns and over-indebtedness.

Michelle Anne Chan, country manager of Atome’s sister entity ADVANCE.CBP, said based on historical patterns, repayment stress usually comes out 60 to 90 days after a sustained cost shock.

“The earliest signs of repayment pressure will be customers who historically paid in full beginning to shift toward minimum payments, and increased loan stacking, where borrowers apply across multiple platforms in short timeframes — a clear signal of urgent rather than planned borrowing,” she said in an e-mail.

CONSUMER PROTECTION
To protect consumers from risks tied to using credit, Atome Philippines’ Mr. Quiros said they educate users about online security, and help them understand the importance of proper regulation and licensing.

“Another underappreciated protection is the tiered micro-spending limit itself. New users start with modest limits and can only access more credit by demonstrating responsible repayment and usage first,” he added.

For Billease’s Mr. Steiger, consumer protection is done through clear and upfront disclosures with terms presented in “plain language.”

“On the security side, we made a significant investment last year by moving from one-time-password-based authentication to biometric verification, which has materially raised the bar against fraud and unauthorized account access,” he said.

“Beyond that, we apply dynamic credit limits that adjust to repayment behavior, cooling-off mechanisms when we detect signs of stress, and continuous identity-theft and fraud monitoring,” he added.

Beyond consumer protection measures, AUB’s Mr. Gomez said financial education and transparency are also essential.

“Consumers should fully understand their repayment obligations before using any form of digital credit,” he said.

In April, the BSP extended its regulatory relief measures to BSP-supervised financial institutions in response to recent geopolitical developments in the Middle East, which includes granting temporary grace periods of up to six months for loan payments.

For PIDS senior research fellow Mr. Albert, consumer protection should include standardized cost disclosure, mandatory reporting to credit bureaus, and affordability checks.

On the regulators side, Union Bank’s Mr. Asuncion said limits on charges must be imposed, alongside strengthening financial literacy efforts and closely monitoring of credit expansion.

Meanwhile, BNPL provider Billease and Atome’s sister entity ADVANCE.CBP both expect “strong” outlook for the industry’s growth in the Philippines.

In addition to its expansion beyond retail purchases, AUB President Mr. Gomez also anticipates “stronger integration between BNPL, digital wallets, cards, and QR-based payment ecosystems, creating a more seamless consumer payment experience.”

“However, the next phase of growth will likely be driven not only by customer acquisition, but also by sustainable portfolio quality, responsible lending practices, and deeper consumer trust,” he added.