In a move that aims to further encourage digital retail payments, the Philippine central bank, Bangko Sentral ng Pilipinas (BSP), says that it is considering lowering digital fund transfer fees for person-to-person (P2P) transactions to zero.
The BSP has published a draft circular earlier this week outlining a plan that, if approved, will remove fees on interbank and inter-platform transfers up to a specified threshold. The same circular also shares that zero fees will be applied to payments made to micro-merchants, or merchants who have monthly aggregate gross receipts of 250,000 Philippine pesos (US$4,447) or less.
Micro-merchants, the central bank notes, include end-users “who utilize either merchant or personal accounts to facilitate acceptance of electronic fund transfers”.
The bank distributed the circular to BSP-supervised financial institutions (BSFIs), including, but not limited to banks, quasi banks, electronic money issuers, remittance agents, foreign exchange dealers and others. BSFIs have until October 11 to submit feedback to the BSP.
Should the circular be formalized, it will amend Section 201 of the Manual of Regulations for Payment Systems, which contains rules on the fees imposed on transactions performed under the National Retail Payment System Framework, to say that personal transactions “shall be provided at no cost to consumers”.
However, the BSP, which is looking to put the new rules in place by April 1 next year, points out in the circular that it has allowed for some wiggle room when it comes to limiting which P2P transactions will be free.
“Accordingly, P2P electronic fund transfers shall be offered free of charge for personal transactions,” the BSP says, “provided that transactions beyond the threshold set in the definition are still allowed subject to fees.”
This move is the latest in the BSP’s efforts to further increase the volume of digital payment transactions vis-à-vis the total monthly retail transactions in the country, as outlined in the country’s Digital Payments Transformation Roadmap.
BSP governor Eli Remolona has earlier said that the bank is pushing for a “cash-lite” economy to provide Filipinos with a “safe, efficient and inclusive digital payments system”.
In July, the bank said it saw a significant increase in digital payments in the country, with 52.8% of all retail payments being done electronically in 2023, compared with just 42.1% in 2022.