Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla expressed confidence on reaching an agreement with banks and other payment operators on the removal of fees on small transactions of P500 and below in the next weeks. “Not yet (done). But I’m confident we’ll get there,” he said. Medalla told reporters Monday, June 19, that it’s been agreed that charging fees on small transactions is prohibitive but they are still working on the ins and outs of waiving fees on small transactions. “Problem is, do you want to extend the same privilege to a large supermarket, maybe not, right? They now have to involve a process,” he said. This is apparently causing the delay in finalizing the agreement to waive small bank-to-bank payment transaction charges. Medalla said there may be merchant registrations for small units that will be required to be entitled to zero fees, but the issue is that small merchants may not want to be registered at all. The idea, he explained, is to treat “every person-to-person transaction as a merchant” and to “let the operating system figure out who is the real merchant as the data evolves.” “The whole industry must agree . I think we’re almost there (we’ve been) talking to bankers and they are interested in making it work,” said Medalla. BSP Deputy Governor Mamerto E. Tangonan, for his part, said another issue they are still discussing is the cost to the banks in implementing zero fees. He said that while waiving fees for P500 or less is not that difficult for banks, they “also want to be clear about cost recovery and if it is bearable (or) that there are other sources of revenues.” “When they see a clear a path, the bankers and payments participants will support (zero fees). They are already seeing the fruits of these policies. It’s just a matter of you want to do it in a way (they won’t lose),” said Tangonan. Medalla had earlier proposed to exclude small payment transactions from fees in exchange for lower reserve requirements (RR). The BSP has already reduced RR ratio and this will take effect on June 30. Medalla is always hopeful they will have an agreement very soon for a no fees on small InstaPay transfers and payments.” This way, InstaPay transactions “will be as cheap as cash.” As of end-March, some banks and non-banks offer free InstaPay service while others charge a rate of P8 to P25 per transaction. Currently, there are 78 InstaPay participating supervised financial institutions, 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). It was in February earlier this year that Medalla first announced intentions to strike a deal with all banks – big banks, thrift banks, rural and cooperative banks – as well as non-banks with quasi-banking functions to agree to a “cost-sharing system” to make digital payments more inclusive. Since February, the BSP has been reviewing and engaging with banks on reducing e-payment transaction fees. Reducing the cost of e-payments is part of the BSP’s 2020-2023 Digital Payments Transformation Roadmap. It is aimed at encouraging low-income households to use digital payments. The BSP is currently supervising 70 registered and licensed EMIs or EMI-Banks and EMI-NBFIs. Of the 70 EMIs, 29 are EMI-Banks or owned by banks while 41 are EMI-NBFIs or owned by non-banks such GCash, PayMaya and GrabPay.