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MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is recommending to remove fees on small transactions to encourage more Filipinos to transact digitally.
BSP Governor Felipe Medalla said that transaction fees can add up, especially when it comes to frequent and small-value transfers.
“One way to make [digitalization] more inclusive, and I’m sure we can work together to achieve it, is if small transactions, up to a limit, will be free of charge so that the poor can also use digital payments. Because when the transaction is small and the fee is P15, it’s quite large relative to the fees,” Medalla told reporters at the sidelines of the BSP’s 2023 Annual Reception for the Banking Community on Friday, February 24.
The last time banks suspended fees for PESONet and InstaPay transactions was during the height of the pandemic. Currently, several banks have resumed charging transfer fees, which can range from P8 to upwards of P50, according to a report by the BSP.
“We, the Bangko Sentral and our partners in the banking system, will be able to work together to find a cost-sharing system that excludes small payments from fees, provided it’s below a certain number of transactions, say three a day,” Medalla added.
To help incentivize banks and financial institutions to eliminate fees, Medalla said that the BSP could ease the reserve requirement ratio (RRR) that banks must comply with. The RRR dictates how much of a bank’s money must be kept untouched. Reducing this would free up banks to use this cash for other income-generating activities.
“I promise you, the central bank will be in a greater hurry to cut reserve requirements so you can afford to give those fees,” Medalla said.
The Philippines’ RRR is currently set at 12%, but Medalla previously expressed that this could go down to single digits before his term ends in July, if inflation falls within target.
“We will reduce the RRR. We hope, in return, the banks will waive all fees on small transactions when people make bank-to-bank payments,” Medalla reiterated on Monday, February 27, during the 2023 Philippine Economic Briefing hosted by the Philippine Chamber of Commerce and Industry.
“We’re literally bribing the banks to subsidize the small transactions,” the BSP governor said.
The BSP has also been aggressively pushing for Filipinos to go digital through its Paleng-QR PH Program that incentivizes market vendors and tricycle drivers to accept cashless payments.