MANILA – The Bangko Sentral ng Pilipinas (BSP) is pushing for the permanent adoption of banks and non-banks’ free online transfers for small value transactions of P1,000 and below in order to encourage more Filipinos to shift to e-payments versus cash.
Banks and non-banks are only issuing time-bound waiver of online transfer fees for small value transactions.
BSP Governor Eli M. Remolona Jr., who has been talking to banks, especially big banks, and non-banks such as GCash and Maya, said what they are aiming for is to have a systematic measure in place, or framework, for this.
“They are hedging. They all have time limits but that’s just hedging,” the BSP chief said in Filipino.
Free small-value online transactions will help the central bank achieve its goal of shifting about half or 50 percent of all payment transactions into e-payments. But no banks or non-banks have yet committed to do away with fees for cashless transfers of P1,000 and below.
Instead, they hedge, according to Remolona. As a risk management strategy, hedging limits losses when banks and non-banks temporarily suspends their online transfer fees.
“But we want it more permanent and more systematic … the intention is to make it indefinite,” said Remolona.
So far, only government-owned Land Bank of the Philippines (Landbank) – the country’s second biggest bank – has announced that it will continue to waive fees for fund transfers to other banks via InstaPay and PESONet for transactions worth P1,000 and below, but it did not say until when they will provide the free service.
There have been four big banks that have initially waived fund transfer fees below P1,000. Besides Landbank, Ayala-led Bank of the Philippine Islands, the Ty-controlled Metropolitan Bank and Trust Co., and the Aboitiz-owned Union Bank of the Philippines have also waived their fund transfer fees for small-value transactions but for a limited time only.
Last month, the BSP announced that it will continue to impose a cap on interbank money transfer fees by InstaPay and PESONet and bans an increase in fees until such time when all banks and non-banks implement zero rates on small e-payment transactions.
InstaPay is a real-time, low-value digital payments facility that substitutes for cash transactions. PESONet is a batch electronic funds transfer service that provides a viable alternative for checks and recurring payments.
The BSP first imposed a moratorium on the automated clearing houses’ fees on Dec. 28, 2021, and ordered all BSP supervised financial institutions (BSFIs) with InstaPay and PESONet to not increase their current fund transfer fees until 40 percent of all retail payments have migrated into digital or e-payments.
As of end-December 2022, 42.1 percent of all payment transactions have shifted to digital form. The BSP is aiming to bring that level to 50 percent by the end of 2023. The latest data on e-payments is expected to be released this quarter.
The BSP said that subject to a review, the moratorium on InstaPay and PESONet fees will only be lifted “when zero fees for small e-payment transactions have been implemented by the payments industry.”
Since 2022, the BSP – using moral suasion — has been in talks with the payments industry to lower or eliminate fees imposed on small e-payments but it seems banks and non-banks have not yet reached an agreement with the central bank as of end-2023.
BSP Deputy Governor Mamerto E. Tangonan has said previously that an issue under discussion with the payments industry is the cost to the banks in implementing zero fees.
He said that while waiving fees for P1,000 or P500 or less is not that difficult for banks, they also want clarity on how to deal with the cost recovery and “if it is bearable (or) that there are other sources of revenues.”
Based on the BSP’s summary of corresponding fees, before the moratorium in 2021, InstaPay fees go from P5 to a high of P30 per transaction, while some offer free of service. As for PESONet, the minimum fee was P10 up to P2,100. Foreign banks may charge in US dollars.
As of Oct. 31, 2023, the lowest is P8 and the highest is P25 per transaction for both individual and corporate InstaPay. PESONet fees start from P5 until P600.
There are some banks that offer both InstaPay and PESONet transactions for free but for most, the free service is only for a short period.
By the end of last year, the combined value of both PESONet and InstaPay transactions reached P12.86 trillion, up 29.3 percent from P9.94 trillion in 2022. Volume-wise, transactions increased by 46.7 percent to 929.64 million from 633.47 million in the previous year.
