Law Summary
Scope and Regulatory Authority
- Governs all credit card issuers, acquirers, and credit card transactions in the Philippines.
- Bangko Sentral ng Pilipinas (BSP) supervises issuers and acquirers with authority to issue rules, conduct examinations, impose penalties, oversee compliance, and regulate fees.
Key Definitions
- Terms defined include acceleration clause, acquirer, balance transfer, billing cycle, card association, cash advances, credit card, credit card issuer, credit card limit, default/delinquency, finance charges, installment purchases, industry association, membership fee, minimum amount due, outstanding balance, statement cut-off date, statement of account, and supplementary card.
Risk Management Requirements
- Credit card issuers and acquirers must establish comprehensive risk management systems.
- Systems cover organizational structure, information management, accounting policies, controls, and internal and external functions.
Credit Card Issuance Standards
- Issuers must perform Know Your Client (KYC) procedures.
- Assess applicant’s credit standing and financial capability before issuance.
Merchant and Cardholder Verification
- Service agreements require merchants to verify cardholder identity.
- Card issuers may verify transactions if suspicious.
Credit Limit Determination and Adjustment
- Credit limits set based on cardholder’s creditworthiness and financial capacity.
- Cardholders must be notified of changes and can decline increases or request adjustments.
Finance Charges
- Based on unpaid outstanding balances after due dates.
Information Disclosure Requirements
- Disclose finance charges, interest rates, late payment fees, fee computation methods, other charges, currency conversion methods.
- Mandatory reminders about consequences of paying less than total amount due.
- Information must be clear, understandable, and at least quarterly in tabular billing format.
Computation Transparency
- Detailed explanation and clear illustration of charges and fees computation must be provided.
- BSP sets implementation date.
Notification of Changes in Fees or Computations
- At least 90 days notice required before changes.
- Cardholders may terminate accounts for unacceptable changes.
Over-the-Limit Transactions
- Transactions exceeding credit limits may be allowed at issuer discretion with clear fee disclosure.
Lost or Stolen Cards
- Transactions before reporting loss/theft are cardholder’s responsibility.
Confidentiality of Cardholder Information
- Cardholder data confidentiality strictly maintained except in specific lawful or consented cases, including exchange with credit bureaus and legal orders.
- Third parties receiving data must also maintain confidentiality.
Customer Assistance and Complaint Handling
- Credit card issuers must have units for prompt resolution of complaints.
- Cardholders have 30 calendar days from statement to report billing errors; issuers must act within 10 business days.
Debt Collection Practices
- Collection must be reasonable, good faith, and without harassment or abuse.
- Use of third-party collection agents allowed but requires prior written notification to cardholder.
- Only one collection agency may handle account at a time.
- BSP sets reputable communication modes for collections.
Payment Due Date and Application
- Due dates falling on holidays/weekends move to next business day.
- Payments made through authorized channels are considered on time.
- Payments exceeding minimum applied first to fees/charges, then highest interest balances.
Account Termination
- Cardholders may terminate accounts anytime but must settle or agree on payment for outstanding balances.
- Installment payment subject to interest unless new agreement violated.
Sanctions and Penalties
- Administrative sanctions on issuers and officers for willful violations, including suspension or cancellation of authority.
- Willful violations punishable by imprisonment (2–10 years) and/or fines (P50,000 to P200,000).
Transition and Effectivity
- Existing credit card companies not supervised by BSP given reasonable time to comply.
- The Act becomes effective 15 days after publication in official or widely circulated newspapers.
Miscellaneous Provisions
- Separability clause ensures unaffected provisions remain valid if part is invalidated.
- Repealing clause rescinds laws inconsistent with the Act.