GOVERNMENT regulation is often portrayed as the enemy of business.
Banks complain of compliance costs. Businesses warn against excessive intervention. Consumers worry that regulation ultimately translates into higher prices. Yet this simplistic narrative ignores an important reality: the best regulations do not suppress markets — they make markets work better.
The Bangko Sentral ng Pilipinas (BSP) recently demonstrated this principle by urging banks and electronic money issuers to adopt “reasonable and fair pricing” for digital fund transfers. Its review of institutions that have yet to comply with Circular 1238 is about more than transfer fees. It reflects a broader regulatory philosophy that promotes competition, financial inclusion, and economic efficiency.
A reduction of P10 or P15 per transaction may seem insignificant. For the country’s millions of micro, small and medium enterprises (MSMEs), however, these costs quickly add up. A small retailer paying suppliers, an online seller receiving customer payments, or a neighborhood restaurant settling salaries and utility bills incurs transfer charges almost every day. Over time, these fees become an invisible cost of doing business.
Lowering this friction does more than reduce expenses. It improves cash flow, encourages businesses to remain in the formal financial system, and supports the country’s transition to a digital economy. More importantly, it recognizes that digital payments are no longer merely transactions — they are essential economic infrastructure.
The policy also reflects a changing business model for banks. Rather than relying on transaction fees, financial institutions can build long-term relationships by offering savings, credit, insurance and investment products. Payments become the gateway, not the destination. Banks that adapt to this model are likely to be more competitive than those that continue to depend on transfer charges.
Yet transfer fees represent only one obstacle confronting MSMEs.
The next challenge is making digital finance genuinely accessible to small businesses.
The BSP has rightly recognized that financial inclusion requires not only more consumers using digital payments but also more merchants participating in the digital economy.
One promising reform is the wider use of alternative credit assessment. Many Filipino entrepreneurs have built strong digital transaction histories but remain excluded from formal lending because they lack traditional collateral or audited financial statements. Properly regulated, payment records and digital sales data can help banks responsibly extend credit to underserved MSMEs.
Government can further encourage MSME lending through well-designed regulatory incentives rather than mandates. Rewarding banks that build sustainable MSME portfolios would expand access to financing while preserving financial stability.
Interoperability also deserves continued attention.
Consumers and merchants should be able to transfer funds seamlessly regardless of the bank or e-wallet they use. Competition should be driven by better products and services — not by the size of a provider’s network.
Financial inclusion, however, requires more than technology. Many entrepreneurs still struggle with bookkeeping, cybersecurity, taxation and financial planning. Expanding digital infrastructure must therefore go hand in hand with financial education to ensure that small businesses can use these tools productively and responsibly.
Perhaps the most commendable aspect of the BSP’s approach is its reliance on transparency rather than coercion. By requiring banks and e-wallet providers to justify their pricing through detailed cost analyses, the regulator promotes accountability instead of imposing arbitrary price controls. This is regulation at its best — protecting consumers while preserving room for innovation and legitimate business judgment.
The Philippine economy cannot achieve truly inclusive growth if moving money remains unnecessarily costly. Digital payments are no longer mere conveniences; they have become essential infrastructure for commerce, employment and entrepreneurship. Every unnecessary peso spent on transaction fees is a peso that cannot be invested in business expansion, innovation, or job creation.
The true measure of regulation is not the number of rules the government issues, but whether those rules make markets more competitive, businesses more productive, and Filipinos better served.
The BSP’s initiative shows that regulation need not be anti-business. When guided by sound economics and good governance, it can strengthen competition, deepen financial inclusion, and create greater opportunities for the country’s millions of MSMEs.
Sustainable economic growth does not come from leaving markets entirely on their own. It comes from ensuring that markets remain fair, efficient and accessible to everyone.
Severo Madrona Jr. is a professional lecturer at the Department of Commercial Law, RVR College of Business, De La Salle University. With a public policy and business development background, he writes about strategic leadership, labor economics, and fiscal policy.