The Bangko Sentral ng Pilipinas (BSP) is championing efforts to lower digital transaction fees across the country. The regulator is pushing for financial institutions to establish a “market-based” and “fair” pricing mechanism for the fees they levy on electronic fund transfers. The ultimate aim of this is to reduce, if not eliminate, costs for Filipinos.

In pursuit of this objective, the BSP is currently soliciting comments from stakeholders on a draft circular. This document will guide financial firms as they adopt a new pricing structure for fund transfer fees. The structure will apply irrespective of the transaction size.

Under the proposed mechanism, BSP-supervised institutions are required to support digital fees with an adequate analysis of the actual costs they incur. These costs arise from providing their electronic payment services. The cost basis will also be subject to potential validation by the BSP itself.

Furthermore, the draft stipulates that the pricing mechanism “shall not unduly favour one end-user relative to others,” promoting equitable access.

Notably absent from this fresh proposal is the BSP’s previously stated explicit plan to entirely eliminate fees on small-value personal fund transfers.

Recent data underscores the progress already made. The share of digital payments in total retail payment transactions grew to 52.8% in 2023, a substantial increase from 42.1% in 2022.

Over 2.6 billion transactions were successfully converted to digital form. This figure equates to the digital share out of the five billion total monthly retail transactions recorded last year. Current InstaPay fees for individual transfers range significantly, highlighting the potential for savings.

Regulated entities must obtain the BSP’s explicit approval before implementing any increases in existing fees. It also applies to them before introducing new charges on digital payment transactions. The proposed circular includes this mandate to reinforce regulatory oversight.

Featured image by Freepik.