For businesses selling consumer products and services, payment terms are often treated as a matter of commercial policy. A merchant may prefer cashless transactions, offer installment arrangements, or partner with financing companies to make products more accessible to customers. However, these policies must be structured with Philippine consumer-protection rules in mind.
One issuance that merchants should be familiar with is Department Administrative Order No. 21-03, Series of 2021 (DAO 21-03) of the Department of Trade and Industry (DTI), otherwise known as the Guidelines for Payment Options on the Purchase of Consumer Products and Services.
Cash cannot simply be taken off the table
The central rule under DAO 21-03 is straightforward: merchants selling consumer products and services cannot impose an “INSTALLMENT ONLY” payment scheme. Consumers must be given the option to pay in cash, in installment, or through a combination of both. Under the Order, denying a consumer the right to pay in cash constitutes prima facie evidence of a violation of Article 52 of the Consumer Act.
This does not mean that merchants are prohibited from offering installment plans or encouraging customers to use them. Businesses remain free to structure financing arrangements that make commercial sense. What they cannot do is make installment payment the only available option where DAO 21-03 applies.
Merchants may also offer a discount for cash payments. Thus, a business can provide incentives for customers who pay immediately, provided that the arrangement does not effectively circumvent the requirement to make cash payment an available option.
The same selling price should apply to digital payments
DAO 21-03 also addresses transactions paid through debit cards, credit cards, prepaid cards, QR codes, electronic fund transfers, and other available digital payment methods. The Order provides that the selling price should remain the same regardless of these payment modes.
For merchants, this is particularly relevant when designing pricing and point-of-sale policies. Payment processing costs should not simply be passed on to consumers by imposing a different selling price based solely on the customer’s choice of an available digital payment method.
Installment arrangements require proper documentation
DAO 21-03 does not prohibit installment sales, but it imposes safeguards. Interest must be expressly stipulated in writing, and the seller must inform the buyer of other fees or charges that may be imposed. The Order also provides that the seller should not impose an interest rate higher than the market-oriented rate and cannot collect more than one year’s interest in advance.
Businesses should therefore ensure that their installment contracts, financing documents, disclosures, and sales procedures are consistent with these requirements.
Payment options should be clearly posted
Compliance is not limited to the transaction itself. Merchants must post their available payment options in a conspicuous place within their business premises and present them in a manner that consumers can easily understand. If the merchant operates a website or mobile application, the payment options should likewise be readily accessible there.
For businesses, DAO 21-03 is therefore best viewed not simply as a restriction on how customers pay, but as a reminder to review payment policies, sales contracts, pricing practices, and customer-facing disclosures. A clear and compliant payment policy can help avoid disputes and reduce the risk of administrative complaints before the DTI.
Merchants should remember that flexibility in offering payment arrangements remains possible. The key is to exercise that flexibility within the boundaries established by consumer-protection law.
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