The Philippines central bank is looking to formalize the removal of fees for electronic fund transfers on small-value transactions to encourage more Filipinos to use digital payments, its chief said.
BSP Governor Eli M. Remolona, Jr. said three big banks have already removed fees on small fund transfers.
“(Fund transfers of) up to PHP 1,000 I think are free for these three major banks and we’re trying to shame the other major banks into following the same policy,” he said on the sidelines of the 2023 Alliance for Financial Inclusion (AFI) Global Policy Forum in Pasay City.
Bank of the Philippine Islands (BPI), Metropolitan Bank & Trust Co. (Metrobank), and Union Bank of the Philippines (UnionBank) are currently the only banks that have temporarily waived charges for InstaPay transactions.
For BPI customers, Instapay transfers of up to PHP 1,000 made using the mobile app will be free until September 30. Customers of UnionBank and Metrobank will be able to make similar transfers for free until November 11 and December 31, respectively.
Mr. Remolona said the BSP is currently using moral suasion to persuade the Bankers Association of the Philippines (BAP) to remove or lower the transfer charges for small-value transactions.
“(Moral suasion) works to a large extent, but we’re formalizing it into a whole payments framework,” he said. “So, we’re talking to the BAP on Friday about payments in general. We have some discussions and out of that we expect something more formal to come out.”
Aside from the BAP, the central bank is also in discussions with digital payment providers GCash and Maya Bank to reduce fund transfer fees.
Sought for comment, the BAP was unable to send a statement as of press time.
Earlier this year, then-BSP governor Felipe M. Medalla proposed to remove the transaction fees for small-value online transfers among banks and other financial institutions.
Based on BSP data as of end-July, some banks and non-lenders offer free InstaPay service while others charge a rate of P8 to PHP 25 per transaction.
There are currently 82 BSP-supervised financial institutions that participate in InstaPay. This includes 22 big banks, 19 thrift banks, 17 rural banks, and five digital banks.
There are also 19 e-money issuers in InstaPay.
As of July, the value of transactions done through InstaPay surged by 40.8% year on year to PHP 2.69 trillion from PHP 1.91 trillion a year prior, separate data from the BSP showed.
The volume of InstaPay transactions rose by 41.6% to 425.07 million as of end-July from 300.18 million a year ago.
InstaPay is a real-time, low-value electronic fund transfer facility for transactions up to PHP 50,000 and is currently being handled by BancNet, Inc.
PESONet and InstaPay are automated clearing houses launched under the BSP’s National Retail Payment System that was rolled out in December 2015 to promote a safe, efficient, affordable, inclusive and reliable retail payment system.
Meanwhile, Mr. Remolona said the Philippine central bank is pushing for more transparency in the country’s payment system.
“In general, when it comes to payments, you want to make sure that the poor don’t subsidize the rich. If you have a credit card and if you’re a big spender using credit cards you get rewards, right? Who pays for those rewards? The small guys who only charge a small amount,” he said.
“We also want the system to be transparent. If you’re going to be charged for something, you want to know what you are being charged for,” he added. — Keisha B. Ta-asan