Anybody who has lived in the Philippines, or traveled here extensively will know this, but for the advantageous of those who are less experienced here, it’s important to know that in the Philippines, cash is always king.
Although since the first time I came here, some 17 years ago, the acceptance of things like Credit Cards has really made a lot of progress, it still is not something that you can count on 100% of the time. Back in the US, and probably in almost all developed countries, credit cards (or debit cards) are used for nearly everything. Want to buy a coke at 7-11? Whip out that plastic! Need something at the drive-through window at McDonalds? Heck, they even take credit cards there these days! Well, credit cards are not quite that ubiquitous here in the Philippines. Basically, any of the large chain stores and such take credit cards, but smaller local stores are just as likely to be “cash only” in most cases.
Even in those larger stores that accept cards, from time to time you may have trouble using it. Especially if you are wanting to use a foreign issued card. For example, a couple of weeks ago, my Mom was shopping at SM Department Store and had a rather sizable number of items to purchase. She was getting an early start on her Christmas shopping for her grandkids here in the Philippines. When she was at the checkout and pulled out her credit card to pay for the purchase, things didn’t work out as she had hoped. The clerk swiped the card in the machine and it was declined! Now, I can assure you that my Mom had plenty of available credit on the card, so the clerk called the authorization center. The people there even talked to my Mom on the phone and she went through all kinds of trouble trying to get the card authorized. After about 40 minutes of numerous tries, the card was finally declined! Well, the clerk held the purchase and Feyma and Mom went to the ATM machine, and took out cash on the same card. Worked fine, so they went back and used the cash to pay for the purchase.
When my Mom came home, she used my Vonage VOIP phone to call her Credit Card company in the States. They said that there had been no request for approval that ever reached the USA. Apparently the card had been declined here in the Philippines without even checking with her card issuer.
So, what I am saying here is that the only thing that is 100% reliable in making a purchase is cash. This is actually true anywhere in the world, not just in the Philippines. I would say that you will have problems (particularly with a foreign card) here more than in your home country, though. The thing is, always try to keep some cash on you to cover your purchases, just in case it is needed.
Back in the States, we would often pay for things with checks. So far, I have never seen a store here that will take a check! If you are a long term customer, maybe you can make a special arrangement with the store, but that is unlikely, I’d say. Now, for things like paying your power bill, phone bill, etc., a check will work just fine. Not for shopping, though!
Happy shopping!
Bob,
I am now using Firefox version 2.0.0.7. I tried it on IE7 and it looks fine. Hmmm, interesting… Why do I always find these strange things? 😆
Sometimes the exchange rate you get when using a credit card is not very good, either, so it is good to know how much you are really paying for that conveinence. We only use our cards here on rare occasions.
The ability to use checks is a pretty new thing, and may not be a viable option in small towns if you do not use a local bank. Cashing a check from a different bank usually costs you some money. Expect surprises.
When we first came to the Philippines, the largest bill was P100, and was worth $5.00. ALL our bills and all spending was done in cash! Can you imagine carrying bundles of that purple money around? People went to the banks with boxes to carry money away! We really were glad to see that yellow P500 appear, and the blue P1,000 was cause for celebration!
Hi AmericanLola – Oh… you just reminded me of a really good story regarding money (the P100 notes). It's a long one, though, and I'll make a full post of it next week. It seems like for both of us, we agree that many things have improved drastically in the Philippines in the years we have lived here! 🙂
Another thing A person has to watch out for, when using A credit card within the Philippines that has been issued elswhere,like the USA,There are hefty fees. I purchased A name brand AIR Conditioner at one of the larger stores in ILOILO and used my VISA from USA. The store tacked on A 10% fee for the usage of the card PLUS, when the card company processed the transaction back in the states they charged me A fee for usage of the card and exchange.I believe this was called A transaction fee also. This 12,999P AIR Conditioner cost about 15,500P when I got done. WOW!! my only regret was for 15,500P I could of had A better AIR Conditioner for the same price if I had used CASH$$ IS KING!!!!!!
ENJOY YOUR WORLD and LOVE EVERYONE and most of all be HAPPY..
Hi Bob Taylor – Wow, that Aircon unit was a spendy one! It is always a good idea to keep all the fees and such in mind when using a credit card, they do indeed add up!
Have a great day, Bob! 🙂
Hi Bob,
I agree. We use cash for 99% of our purchases there because our credit card company charges about 2-3% for international purchases. It may be a tiny percentage but it accumulates fast if you're making a lot of purchases. Also, some stores charge extra if you're paying by credit card, usually 4% of the purchase price. Reason is that is what the bank charges them so they're passing it on to you.
Using cash is not the best thing to do, of course, in terms of security and such but we don't have much choice. Also, the exchange rate is better with money changers versus banks or SM. With SM, it's too much of a hassle to do an exchange because you have to fill out a form, note down the serial number of each bill, etc. We go to our regular money changer in Aldevinco in Davao or Sanry's (?) in Makati. Their rates are very good. I heard that some money changers offer a better rate for $100 bills. I always ask for Php1K bills. It's easier to count and less bulky.
I haven't tried the ATM machines there yet. Reading the horror stories you have written, I don't think I will.
Hey Bob,
Why is American Lola's comment in very tiny letters? 😕
Hi Tina – First, regarding American Lola's comment – it just looks normal to me, the same size letters as all the other comments! Hmm…
Regarding the ATM network here, it is mostly pretty good, just be a little cautious. We basically live by the ATM machines to an extent, so I can't complain too much! 🙂
As of January 2006 (if I recall correctly) there is a law in the Philippines that prohibits stores from charging extra for credit card purchases. Some stores try to sneak in ways of getting the extra, but most places follow the new law.
Hi Bob:
Most Phil banks won't change your dollar bills when they find even a little wrinkle. They want the bills in mint condition, not those that look like they're laundered 🙄 . Some want to change only for $ bills of higher denominations. So if you bring cash ($) to the Phils make sure your money are crisp ! 😆 🙂
I have heard that USA issued Visa cards have now begun to add a 'international' exchange fee. I have yet to verify this but it is something to check on before a trip, from my understanding its a hefty fee.
Hi Jul – Yes, that is very true. Some will exchange bills that are not perfect, but will give a lower exchange rate for those, which is a rip off too, because they get the same exchange rate when they turn them in. It's something to watch out for!
Hi Brian – I have not heard about that, but it sure is one more reason to stick with cash, except in an emergency! 😯
Hi Tina – Hmm… I am using Firefox too (although I use Linux as my operating system) and I see no problem. I just checked on my laptop, which is Windows with Firefox, and I see what you mean. I'll watch if this is a recurring problem or not.
I'm gonna make you my beta tester! 😆
Hi Tina and everybody – I believe that I have fixed the bug that caused AmericanLola's comment to look funny on some browsers. If you see it still, please refresh your screen, and if it's still there, let me know! 🙂
It's fixed, Bob! U da man! 😀
Bob, you are right. There was a new law that went into effect in January 06 that prohibited charging a service fee for using credit cards.
When I was there in July and August and buying furniture and appliances for my condo, I found the stores offering me discounts for paying by cash and charging the sticker price if I wanted to pay by credit card. So, in essence, they were charging a service fee. I don't recall what the discount was for paying by cash but I think it was around 5%. I would guess that, when the new law went into effect, they jacked up prices to cover the loss of the fee. This was only done at stores not located in the SM Mall.
I don't carry a Visa card but when I called MasterCard and Amex before I left the States to tell them I would be in the Phils, they told me there would be a 3% service charge for overseas charges and, sure enough, there was.
As for exchanging money, I got the same exchange rate for a $20 as I did for a $100 although typically I only take $100 with me. I don't exchange at banks as they typically have lower rates than the money changers. I prefer getting the P1,000 note but I have found some places that won't accept it because they don't have change. On our last day in Samar, we went to Jollibees in Calbayog for breakfast before catching the plane. The total bill for all of us was P538. I gave them a P1,000 note and they gave it back because they did not have enough change. I was stunned. I would expect that from a small store but not from a Jollibees. Thankfully, my gf's mother had the P38 or we would have had to return some of the food or bought more food so they could make change. So, not only did they not have the breakfast item I wanted, which was prominently advertised, they also did not have any diet coke and they could not make change for me. Only in the Philippines. 😆
Bob , on our vacation , last July , in Iligan ,we went to the Equitable bank.
Want 40.000 peso.
But at the desk , they told my wife , she can not have any money
with her card [ Master Card ] and i sat down and watch.
They tried and tried , but nothing.
So , i went to the desk allso. And , they treath me with more regards as they do my wife.
And at last , she can have 20.000 peso , so i allso take 20.000 with my
[ Visa ] Card.
At home later we saw , that the charge together was,
some 40 Euro = $ 60 = 3000 peso.
But when you go outside with the machine the most you can get is 5000 peso [ what cost 200 peso ]
So you have to do it 8 times [ 1600 peso costs ]
It,s cheaper but it will take you a lot of time. Gr. Anton
Hi Gary – As I said previously, indeed there are some stores that play the "discount for cash" trick as a way around the law, but most stores play it straight now. I would say that less than 10% try to play games like that.
Hi Anton – Just in case you should need to do this…. at BPI bank, you can take out up to P20,000 per transaction in their ATM machines, so that wil save a lot on ATM charges instead of back when you had to do the multiple transactions that you elude to.
An excellent article … and as usual, many don't understand the realities of credit cards … in the Phils or the US. As someone who used to take credit cards for their business I can assure you the merchant pays 3 to 10% … and sometimes even more … to allow the credit card use. The agreements merchants have to sign in the US forbid them offering cash discounts .. so how do you think the percentage fee gets paid? yep the "real" price is jacked up and the cash buyer helps pay for the credit card use. As a consumer you undoubtedly think this is unfair but if you are earning your living selling merchandise at a few percent merk-up you wil do what you need to do to do.
Until that goofy law was passed in the Philippines I considered the practice of having a cash and a credit price here better, actually … you knew what you were paying … now the merchant legally can't offer a discount for cash so … guess what … we're all paying more …or the store stops taking cards.
When going to the bank to get "cash on your card" remember that a credit card and a debit card are not the same. If you get a cash advance on your Visa or Master _credit_ card it is a _loan_ … read your credit card agreement .. you will pay, in addition to any other fees as much as 5% … even if you pay the balance off in the same month. Some cards can be used as either credit or debit … make sure they put the transaction in as a debit .. Philippine card or US card, it works the same.
last word of wisdom. Under US federal law you can not be held liiable for any more that $50 for fraudulent use of a US-issued card … and most issuing banks never even ask for that. A Philippine-issued card has no such limitation .. if you lose the card and someone runs up charges you are liable for every centavo … again, read your cardholder agreement … that's why I turned down the nice card my bank made up for me … I carry a Philippine debit card only and make sure there is never more money in the account that is "tied" to that card than I cna afford to lose.
In spite of all the identity theft horror stories, US plastic is pretty safe but Philippine-issued credit cards are like a hand grenade with a loose safety pin … handle with caution.
Poor me,my UK debit card will not work anymore in any ATMs but both London and local banks do not know why so CASH IS KING
Hi Dave Starr – Yep, merchants do have to pay a percentage, and that adds a little to the price that everybody pays. No doubt about that. Great advice on the liability issue too, in case your card is stolen or compromised.
Hi Stephen – Wow, sorry to hear that you are still having trouble with the card!
Hi Bob, hope this will help everyone at some point. Learned my lesson before and talked to my credit card issuer/s about the issues. Hence, I was advised to notify the bank/s by calling them everytime before I leave to PI yearly during the holiday season (for 10 years now). Just let the bank /s know how long you'll be gone and possibly may use credit cards for shopping purposes and purchases there. Since then, no hassle!, problem!, as I shopped at duty free for major appliances, use the plastics in hardware stores, construction materials, chandelliers at Alabang Town Centers,etc., etc. for our vacation house in Tagaytay. Very convenient! just like here in USA even if CASH IS KING!!! still…
Again, more power Bob!
Bob,
It is not about this article, but I was looking around and found this. definitions to "FLIP"
I hope you post this for all to share.
Bob I read your blog daily,as my wife and i plan to move to samal island in 2008.i find this blog very helpful.My income consists of pension and cash investments and i am in need of help in how to transfer funds to Davao .Easy and inexpensive.Thank you Jim in Fla. P.S I would need to set this up for monthly deposit.
Hi Ida – Just to be clear, in my Mom's case, she did call her credit card company before coming to the Philippines. She also called them after this incident. The USA credit card company said that they were never approached for approval. Somebody in the Philippines declined the card without even checking with the US issuer. I do agree, though, you should notify your card issuer if you plan to travel here.
Hi Bruce – I removed that link. The word is, frankly, offensive. It stands for F***ing Little Island People. I was clear a while back that I do not want this on the site. It does not belong here.
Bob,
they show that and nice definitions too, I did not mean to offend
Hi jamesclydeduncan – Once you are over here, you can set up something with your bank for depositing. One thing you can do to do this free would be to simply write a check on your US account, deposit it into your Philippine account and wait for it to clear. It will take 30 to 45 days for it to clear, but once you have a system going where you just deposit every month, the money will regularly become available. There are ways to transfer it electronically too, or use an ATM to get it, but those become more expensive. Good luck to you!
Hi Bruce – I understand that it is not your intention to offend. The term, however IS offensive. Yes, they had some nice stuff there too, but this has been a "hot button issue" here on the site, and I don't want it here any more. I have been clear about that in the past. You are free, of course, to put it on your site, but personally, I don't want to be even associated with it.
Bob thanks for the help,I think the check deposite is a good idea and will give it a try.jim.
Hi Jim – Happy to be of assistance! 🙂
get a capital one visa credit card ,they dont charge any international transaction fees and even eat up the visa 1% fee. check google search ,you will see its bet card for overseas.also with atm cards try get bank that reimburses fees other atm s charge and if you can get a plain bank atm ccard do so,because visa atm check cards have the 1% visa fee.
Hi Jay – The problem is, as I pointed out in the article, a lot of times the systems here for card approval and such is not functional. No matter how good the deal on fees, if the approval doesn't work, you are out of luck! Thanks for the pointer on a card that has low fees though. 🙂
Hi Bob:
My fiancee asked at differant banks in Iligan and was told that I could not open an account in the Philipines until I had move there and been there awhile. If you know, is that true?
Thanks for your time
Hi Tim Payne- That is not the law. However, it is also up to each individual bank to decide what their account policies are.