The Bangko Sentral ng Pilipinas (BSP) is poised to approve the imposition of zero fees on person-to-person (P2P) electronic fund transfer (EFT) transactions and micro-merchant payments in a bid to migrate more retail payments into digital form.
In a draft circular currently being circulated among banks and non-banks, the BSP is eliminating fees on EFTs for personal transactions up to a specified threshold on the number of transactions, and on payments for micro-merchants. The circular was released Monday, Sept. 30.
Once the circular is approved, it effectively cancels the existing moratorium on the increase of InstaPay and PESONet fees which was imposed since 2021.
The BSP said the moratorium will be rescinded for the payment service providers (PSP) “upon its implementation of the provisions in this circular but not later than April 1, 2025 subject to the submission of the PSP to the (BSP) of a proof of full compliance with the provisions of this circular.”
Banks and non-banks have until Oct. 11, 2024 to submit feedback and recommendations to the BSP with regards to the provisions of the draft circular.
The circular did not specify the volume and threshold for the transactions, but it will direct all its supervised financial institutions or BSFIs and its board of directors to adopt a policy on the imposition of any fee on electronic payment transactions. The BSP said such policy will be the basis and quantitative support for the setting of fees and rationalization of the fee structure or amount.
The imposition of fees for transactions will be guided by the following: on consumer pricing, BSFls will adopt reasonable and fair market-based pricing models which do not arise from agreements with other BSFls to fix the price of product or service delivery; and the service fees for electronic payments are expected to be lower than the fees collected from transactions made manually or over-the-counter (OTC) as electronic payments are considered to provide more efficient and cost-effective means of delivering service.
“Accordingly, person-to-person electronic fund transfers (will) be offered free of charge for personal transactions provided that transactions beyond the threshold set in the definition are still allowed subject to fees,” said the BSP.
For merchant acquisition services, the central bank noted that the pricing mechanism will be based on merchant fees that may be charged to merchants availing of merchant payment acceptance activities.
However, the BSP said “such fees (will) be waived for those that are classified as micro-merchants (and that) such pricing mechanisms for merchants that are not covered by the exemption shall be reasonable, transparent, market-based, and proportional to the cost of the services offered in order to sustain the business operations of the parties involved.”
The BSP describes micro-merchants as end-users of merchant payment acceptance activities. Under the Magna Carta for Micro, Small and Medium Enterprises and other related laws and regulations, a micro enterprise has a monthly aggregate gross receipts not over P250,000.
Meanwhile, a personal transaction or P2P in terms of payment services “is a fund transfer involving persons which can either be a remittance or lending of funds, done for personal, family, or household purposes and not conducted in the ordinary course of business,” according to the BSP.
“An end-user is considered using his account for personal transactions when the number of person-to-person electronic fund transfers from his account does not regularly exceed ten times a week,” the BSP added.
The BSP has been encouraging banks and non-banks to implement a permanent zero rate for small value transactions of P1,000 and below.
BSP Governor Eli M. Remolona Jr. has said that banks and non-banks have been hedging, and only issuing time-bound waiver of online transfer fees for small value transactions.
Free small-value online transactions will help the central bank convert more than 50 percent of all payment transactions into e-payments.
The BSP first imposed a moratorium on the automated clearing houses’ fees on Dec. 28, 2021, and ordered all 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-2023, more than 50 percent of payment transactions are digital.
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.