MANILA, Philippines – In a bid for greater financial inclusivity, the Bangko Sentral ng Pilipinas (BSP) is pushing for more banks to remove fees on small-value transfers. But without any formal regulations issued, the central bank is still hoping to “shame” big banks into waiving fees.

“For now, three of the major banks have removed fees on small transfers up to P1,000. We’re trying to shame the other major banks into following the same policy,” BSP Governor Eli Remolona Jr. said during the 2023 Alliance for Financial Inclusion (AFI) Global Policy Forum on Thursday, September 14.

According to a BSP report, fees generally range from P8 to P50. They also tend to stay the same regardless of transfer value, which can disproportionately impact small transactions. At the same time, small transactions make up a large portion of digital transfers.

“In general, when it comes to payments, we want to make sure that the poor don’t subsidize the rich,” Remolona clarified.

But so far, there are no strict government regulations limiting what banks can charge for transactions. Instead, the BSP is relying on “moral suasion” – or simply persuading or appealing to banks.

“It works to a large extent, moral suasion. But we’re formalizing it into a whole payments framework,” the BSP governor said.

Remolona plans to meet with the Bankers Association of the Philippines and digital payments providers like GCash and Maya to work out a formal framework.

The central bank has been pushing for fees on small transactions to be removed since early 2023. Former BSP governor Felipe Medalla said regulators and banks could work together to find a “cost-sharing system” to scrap fees for small payments below a certain number of transactions. (READ: Fees no more? Bangko Sentral wants to remove fees on small transactions)

How can this help promote financial inclusion?

The BSP considers digital payments as the “gateway to financial inclusion” because online platforms can ease more Filipinos into the financial system. 

“If you participate in digital payments, it’s very easy to have a deposit account and then from there, borrow from banks and get insurance. It’s a big pillar and matter for us when it comes to financial inclusion,” Remolona said. 

During the pandemic, when lockdown restrictions shuttered people indoors, most had little choice but to transact digitally. Consequently, the share of digital transactions to retail payments rose from 14% in 2019 to 42% in 2022. As consumers began opening digital accounts, mobile wallet ownership surged from 8% in 2019 to 36% in 2021.

In the span of two pandemic years, 22 million Filipinos “became financially included,” according to the BSP governor.

“We have seen depositors improve their lives from gaining access to other financial services such as loans, insurance, and investments. For instance, insurance helps farmers recover faster from losses inflicted by natural calamities, while small business loans help micro-entrepreneurs expand or pivot their businesses,” Remolona said.

With the Philippines playing host to this year’s AFI gathering, the group’s members formally adopted the Manila Manifesto on Wednesday, September 13. Under it, AFI members from over 70 countries pledge to “coordinate, collaborate, and engage with global standard-setting bodies.”

The AFI estimates that 1.4 billion people worldwide are still excluded from formal financial systems. – Rappler.com