DIGITAL payment transactions have markedly increased after banks waived or reduced fund transfer fees, a senior Bangko Sentral ng Pilipinas (BSP) official said on Tuesday.
“We’ll take a more systemic dipstick measurement at the end of the month, but banks are already telling me that their transaction volumes have increased anywhere from like 10 to like 50 percent,” central bank Deputy Governor Mamerto Tangonan said in a television interview.
Banks have been announcing the removal or reduction of transfer charges following a new BSP pricing framework aimed at making digital payments more affordable.
Almost all local banks have already waived their transaction fees, including Bank of the Philippine Islands, Banco de Oro, Land Bank of the Philippines, Metrobank, Rizal Commercial Banking Corp., ChinaBank, Union Bank of the Philippines, Security Bank, Philippine National Bank, PSBank, EastWest and Bank of Commerce.
Maya and Gcash, meanwhile, cut their fees to P10 from P15.
The BSP has encouraged financial institutions to ensure that fees for interbank transfers are close to, or not materially higher than, charges for transfers within the same bank or e-wallet.
Tangonan said lower transaction costs were expected to encourage more Filipinos to shift to digital payments, noting that expensive transfer fees consistently rank among the top reasons consumers avoid using digital financial services.
“It is really helping our cause to lower these fees because what we want is to bring in more people into the formal finance, the formal economy,” he said.
“High transaction fees is persistently among the top three or four reasons for non-use of digital payments by consumers based on surveys recently taken,” he added.
Wider use of digital payments could help boost economic activity by reducing informality while promoting greater financial inclusion, Tongonan said.
“Digital payments can increase GDP (gross domestic product) per capita and also reduce informality. So these are our goals,” he added.
Beyond higher transaction volumes, the BSP official said they were also seeing encouraging signs that lower fees were attracting Filipinos who previously had no access to formal financial services.
Tangonan said several banks had reported onboarding new customers after introducing lower transfer charges, aided by online account opening using the National ID authentication service.
“I was even told by one large bank that those new customers... when they ask them ‘what other accounts do you have?,’ the answer was none. It means this is the first time that they are opening an account... So it matters a lot,” he said.
The BSP sees this as an important step toward expanding financial inclusion, particularly among small businesses and consumers that have traditionally relied on cash.
Tangonan said while it was still too early to determine the full impact on microentrepreneurs and small merchants, increasing the number of people using digital payments should create a “network effect” that encourages more businesses to accept electronic payments.
“If there are more people who are going to walk around using digital payments, that would definitely encourage more merchants to accept it,” he said.
“More merchants in the system will encourage the holdouts, the remaining non-users to start using it. It goes on into a virtuous cycle, what we call the network effect,” Tangonan continued.
The BSP last week also met with banks and e-wallet operators that had yet to fully implement the pricing framework and Tangonan said many institutions initially misunderstood the central bank’s policy.
“We are not saying you zero your fees. We’re just saying that the difference between the fees you charge for interbank transfers should be close to or not materially higher than the fees you charge your customers to transfer within the same bank or e-wallet,” he said.
Tangonan said the regulator expects additional financial institutions to adopt the policy following the consultations. He also believes market competition will naturally encourage banks that continue charging relatively higher transfer fees to adjust their pricing.
“If the top players now waive or lower their fees, it’s very hard to convince your customers to be loyal to you because consumers have options,” he said.
Instead of relying on transfer fees for revenue, Tangonan said banks should increasingly compete by offering better deposit products, loans, insurance and investment services.
