BSP still in talks with banks to waive fees on small transfers

THE BANGKO SENTRAL ng Pilipinas (BSP) is still in talks with banks on the permanent removal of fees for small-value transactions, with lenders saying this would be challenging as fund transfer services entail operational costs.

BSP Deputy Governor Mamerto E. Tangonan said the central bank is still working with the banking industry as the regulator wants transaction fees for transfers below P1,000 waived permanently.

“There are still some concerns, but we’re working on overcoming those concerns,” he told reporters during the annual reception for the banking community late last month.

Banks are worried about their operational costs, he said, which include the expenses incurred for the delivery of services like fund transfers.

“For [a bank] to operate it (fund transfer services) for free, they have to recover some of the costs somewhere else,” Mr. Tangonan said.

BSP Governor Eli M. Remolona, Jr. earlier said the central bank has been employing moral suasion to influence the banking industry to permanently remove charges for small-value person-to-person online transactions.

The BSP has been encouraging banks since February last year to formalize the removal of these fees to help boost digital payments.

Bank of the Philippine Islands (BPI), Metropolitan Bank & Trust Co. (Metrobank), and Union Bank of the Philippines, Inc. (UnionBank) are some of the lenders that have temporarily waived charges for InstaPay transactions below P1,000 since last year.

For BPI customers, InstaPay transfers of up to P1,000 using its app will be not be charged a transaction fee until March 1, while Metrobank has extended its own promo until June 30.

Sought for comment, BPI President and Chief Executive Officer (CEO) Jose Teodoro “TG” K. Limcaoco said banks should be able to charge what they want for transfers, like how they can impose fees on withdrawals from automated teller machines. 

“There’s a cost to making transfers. It’s not free for the banks,” he said, noting that these expenses are related to technology, cybersecurity, and charges from the switch and the provider.

“That’s why within the bank, BPI to BPI, it’s free because there are no costs for us. But when you go outside the bank, there is a direct cost, and it’s unfair to insist that it should be free. You have to leave it up to every bank,” Mr. Limcaoco said.

UnionBank President and CEO Edwin R. Bautista said while it is possible to waive transaction fees for small-value transactions, recovering losses could be difficult.

“If the customer transacts purely digitally, our costs are low, so I think that’s okay,” he said in mixed English and Filipino. “But I think the problem for this is if some of the banks have customers who are half digital, half branch-based as costs could eat into the resources of the bank.”

Banks that process bigger volumes of digital transactions would take a hit, Mr. Bautista said, noting that UnionBank has around nine million transactions monthly that are made through the BSP’s automated clearing house InstaPay.

Removing transaction fees may not necessarily motivate consumers to use digital payments more, Rizal Commercial Banking Corp. President and CEO Eugene S. Acevedo said.

“We’re not sure whether that’s exactly what will motivate people to use it more. We’re experimenting with it, but we’re looking for other ways to see how else we can increase the usage… A customer is not just somebody who does payments. A customer does other things. We have to think of the customer as part of an ecosystem,” he told reporters.

“What we’re challenging ourselves is what else we can do to increase usage beyond that… For example, incentives for usage. Another would be bundling it with other banking products,” Mr. Acevedo said.

Metrobank President and CEO Fabian S. Dee said there was a small increase in online transactions following the fee waiver.

“(Losses) are part of the whole equation. We’ll see how it goes,” he said.

The value of transactions done through InstaPay climbed by 41.8% year on year to P5.02 trillion in 2023 from P3.54 trillion previously, central bank data showed

Meanwhile, the volume of InstaPay transactions went up by 34.6% to 838.56 million from 548.66 million in 2022.

The combined value of transactions done via the InstaPay and PESONet grew by 29.3% to P12.86 trillion in 2023 from the P9.94 trillion seen in 2022. In terms of volume, transactions through these payment gateways climbed by 46.7% to 929.64 million last year from 633.47 million in 2022. — Keisha B. Ta-asan