Banks, electronic money issuers reviewing zero transaction fees on small transfers

By Keisha B. Ta-asan, Reporter

BANKS and electronic money issuers (EMIs) are still reviewing the removal of transaction fees for small online fund transfers, an official from the Bangko Sentral ng Pilipinas (BSP) said.   

BSP Deputy Governor Mamerto E. Tangonan said talks between the central bank and the payments industry to remove or lower transaction charges for small e-payments have been productive.   

“Many banks have waived their fees on e-payments (for) P1,000 and below. Others are continuing their review of their financials to see how they can make it possible,” he told BusinessWorld in a Viber message.   

Mr. Tangonan said banks that have waived fees on small fund transfers are assessing the value gained from having zero fee transactions such as an increase in customers and higher client loyalty.   

As of Nov. 7, nine banks have waived PESONet charges until further notice while two lenders are implementing zero fee transactions until Dec. 31, 2023.    

For fund transfers through InstaPay, seven banks have removed transaction charges until further notice, while five lenders have waived their fees until end-December 2023.   

PESONet caters to high-value transactions and is considered as an electronic alternative to paper-based checks while InstaPay is a real-time electronic fund transfer facility for low-value transactions of up to P50,000.

To boost the usage of digital payments among Filipinos, the BSP has been encouraging BSP-supervised financial institutions (BSFIs) to waive or lower rates on small e-payments since last year. But banks and non-banks have not yet reached an agreement with the central bank.

Last week, the BSP released Memorandum No. M-2023-037, which states that the moratorium on transfer fee increases remains in effect. It was first imposed in 2021.   

“The moratorium is in effect until the banks and EMIs waive their fees on small e-payments and subject to our review,” Mr. Tangonan said.   

Based on the memorandum, a transfer fee that is currently waived may only be restored up to the amount reported to the BSP before the waiver. 

BSFIs who are also planning to introduce fees for new fund transfer services will need to apply for prior BSP approval. These fees must also be reported to the BSP 60 days before implementation.   

BSP Governor Eli M. Remolona, Jr. earlier said the central bank is actively working on lowering and ultimately eliminating fees on small electronic payments.

“The reduction or removal of transfer fees for small e-payments supports our vision of digitalization and inclusivity. We are engaging the industry through dialogue to explore ways to reduce or completely eliminate fees for small-value transactions,” he said.   

Last week, lawmakers filed a bill that seeks to waive additional fees in small electronic wallet (e-wallet) transactions at the House of Representatives.   

Under the proposed law, all electronic fund transfer service providers will be required to waive all fees associated with small-value transactions.

The fee waiver will be applied when sending money to another e-wallet user, cashing in or cashing out to an e-wallet account, and transferring funds to a bank account.

The BSP will have the authority to adjust the transaction amount subject to waived fees based on the daily cost of living, current exchange rate, and inflation rate.

Based on BSP data, the combined value of transactions done through the BSP’s automated clearing houses InstaPay and PESONet rose by 30.6% to P10.39 trillion as of October from P7.95 trillion in the same period last year.   

In terms of volume, transactions coursed through the clearing houses grew by 43.7% to 733 million as of end-October from 510 million in the comparable year-ago period.

The BSP is targeting to digitalize 50% of total retail transactions and onboard at least 70% of Filipino adults to the financial system by the end of this year.