The Bangko Sentral ng Pilipinas (BSP) will continue to impose a cap on interbank money transfer fees by InstaPay and PESONet and bans an increase in fees until such time when all banks and non-banks implement zero rates on small e-payment transactions.

The BSP issued this statement Tuesday, Dec. 19, after the Monetary Board, its policy-making body, decided to maintain the moratorium on InstaPay and PESONet fees on Dec. 7, in a Monetary Board Resolution No. 1599.

InstaPay is a real-time, low-value digital payments facility that substitutes for cash transactions. PESONet is a batch electronic funds transfer service that provides a viable alternative for checks and recurring payments.

The BSP first imposed a moratorium on the automated clearing houses’ fees on Dec. 28, 2021, and ordered all BSP supervised financial institutions (BSFIs) with InstaPay and PESONet to not increase their current fund transfer fees until 40 percent of all retail payments have migrated into digital or e-payments.

As of end-December 2022, 42.1 percent of all payment transactions have shifted to digital form. The BSP is aiming to bring that level to 50 percent by the end of 2023.

On Tuesday, the BSP said that subject to BSP review, the moratorium on InstaPay and PESONet fees will only be lifted “when zero fees for small e-payment transactions have been implemented by the payments industry.”

BSP Governor Eli M. Remolona Jr. said the BSP is encouraging Filipinos to “actively use their accounts for digital payments, savings, and investments”. To achieve this, the BSP wants BSFIs to waive or have zero rates on small e-payments.

“The central bank is working with the industry to bring more of our countrymen into the fold of the formal financial system,” he said.

Waive fees on small e-payments

Since last year, the BSP – using moral suasion -- has been in talks with the payments industry to “lower or eliminate fees imposed on small e-payments” but it seems banks and non-banks have not yet reached an agreement with the central bank.

Remolona reiterated that “the reduction or removal of transfer fees for small e-payments supports our vision of digitalization and inclusivity.”

“We are engaging the industry through dialogue to explore ways to reduce or completely eliminate fees for small-value transactions,” he added.

Meanwhile, the condition tied to the lifting of the moratorium which is when BSFIs implement zero fees for small e-payments is consistent with the BSP’s objective and commitment to have a cash-lite economy.

It said a cash-lite economy will be achieved “by fostering reasonable, competitive, and transparent pricing mechanisms, while advocating the reduction of digital payment fees, particularly for small e-payments.”

The BSP reminded BSFIs that if they plan to introduce fees for new fund transfer services, this will still need BSP approval.

“These fees must also be reported to the BSP 60 days before implementation,” it said. “Moreover, a transfer fee that is currently waived may only be restored up to the amount reported to the BSP before the waiver,” it added.

The BSP warned that non-compliant BSFIs who are members of the Philippine Payments Management Inc. (PMMI) will face “enforcement actions” as per the National Payment Systems Act and the New Central Bank Act, as amended.

PMMI is the industry body that oversees the operation of InstaPay and PESONet. It is tasked to monitor regulatory compliance of its members and to promptly report any issues to the BSP for appropriate action.

Based on the BSP’s summary of corresponding fees, before the moratorium in 2021, InstaPay fees go from P5 to a high of P30 per transaction, while some offer free of service. As for PESONet, the minimum fee was P10 up to P2,100. Foreign banks may charge in US dollars.

As of Oct. 31 this year, the lowest is P8 and the highest is P25 per transaction for both individual and corporate InstaPay. PESONet fees start from P5 to P600.

There are some banks that offer both InstaPay and PESONet transactions for free but for most, the free service is only for a limited time.  

Since the moratorium, InstaPay and PESONet participants were directed by the BSP to maintain the transfer fees for fund transfers and to disclose to the BSP their fees, including the waiver and reduction in fees.

Remolona has been urging all banks especially big banks to waive transfer fees on small online transactions.

Earlier, Remolona admitted that for the moment, in the absence of a formal payments framework or other regulations that will compel banks to remove or reduce fees on small transactions, all the BSP could do is make an appeal using moral suasion.  

Currently there are four big banks that have removed fees on small transfers up to a certain amount. These banks are Ayala-led Bank of the Philippine Islands, the Ty-controlled Metropolitan Bank and Trust Co., the Aboitiz-owned Union Bank of the Philippines and government-run Land Bank of the Philippines.

Remolona said BSP is also talking to non-banks with digital payments such as GCash and Maya, formerly PayMaya.

Currently, there are 78 InstaPay participating BSFIs of which 22 are big banks, 19 are thrift banks, 15 are rural banks, and five are digital banks. There are also 17 non-bank financial institutions (NBFIs) in InstaPay as e-money issuers (EMIs).

There are also 105 BSFIs with PESONet, of which 40 are big banks, 35 are rural banks, 17 are thrift banks, five are digital banks, and eight NBFI EMIs.

In October this year, InstaPay transactions in terms of value reached P457 billion with 86.45 million volume. PESONet in terms of value transacted P697.2 billion with 7.87 million volume.

Both transactions were higher compared to same period in 2022 of 48.79 million in terms of volume worth P313 billion for InstaPay and seven million volume worth P539 million for PESONet.