BSP issues rules on e-payment pricing

The Bangko Sentral ng Pilipinas (BSP) has approved the guidelines on the pricing of electronic payments or e-payments to be adopted by both banks and non-banks to ensure “transparent, fair, and competitive pricing” of payment services.

BSP Deputy Governor Mamerto E. Tangonan, who signed Memorandum No. M-2024-015 last May 24, has recommended e-payments pricing practices to be implemented by BSP Supervised Institutions (BSls). These are pricing structures of e-payment services to end-users.

The BSP has also started to conduct a survey on BSIs' pricing structure.

According to the memo, the guidelines are “consistent with the regulatory requirement of a Board-approved policy on pricing, in line with the principles outlined (in previous circulars)” which the BSP has classified into three general categories: reasonable and fair market-based pricing; responsible pricing; and transparent pricing.

Tangonan said the guidelines on e-payments pricing were based on the 2017 Circular No. 980 on the adoption of the National Retail Payment System (NRPS) Framework and the 2022 Circular No.1160 on the regulations on Financial Consumer Protection to implement Republic Act No. 11765, otherwise known as the "Financial Products and Services Consumer Protection Act."

The memo included details in pricing governance, on the reasonable and fair market-based pricing, responsible pricing, and transparent pricing.

Under pricing governance, the BSP said BSIs will adopt a policy on fees of retail e-payment transactions, including the basis and quantitative support for the setting of fees or charges, and rationalization of the fee structure or amount. Such pricing policy will require monitoring, reporting and periodic review.

To ensure reasonable and fair market-based pricing, BSI's pricing policies should emphasize the importance of avoiding price-fixing agreements, adopting competitive fair pricing strategies, and ensuring reasonable cost recovery, said the BSP.

The BSP also noted that to have responsible pricing, a BSI should follow the recommendations in the memo and to provide e-payment services “in a manner that is affordable for clients and sustainable for the BSl.”

“BSls may also opt to have their product governance mechanism assess whether algorithms that influence or determine pricing may be unfairly biased toward certain groups of people, especially vulnerable segments,” said the BSP.

As to transparent pricing, the BSP said “transparency in pricing is mainly achieved through appropriate fee disclosure to end-users and regulatory reporting.”

In December 2023, the BSP announced that it 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 first imposed a moratorium on the automated clearing houses’ fees on Dec. 28, 2021, and ordered all BSP supervised financial institutions with InstaPay and PESONet not to increase their current fund transfer fees until 40 percent of all retail payments have migrated into digital or e-payments.

Since as of end-December 2022, 42.1 percent of all payment transactions have shifted to digital form, the BSP said that subject to a 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.”

Based on BSP data as of end-March this year, the value transactions of banks and non-banks via the PESONet and InstaPay reached P3.81 trillion, up 33 percent from same time last year of P2.87 trillion.

The combined volume of both PESONet and InstaPay in the first three months of the year increased by 70 percent to 309.3 million versus 182.4 million in 2023.

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.

Currently, there are 86 InstaPay participating banks and non-banks of which 22 are big banks; 20 are thrift banks; 18 are rural banks; five are digital banks; and 21 are non-bank financial institutions (NBFIs) as e-money issuers.

As for PESONet, there are 109 participating banks and non-banks, of which 40 are big banks; 38 are rural banks; 18 are thrift banks; five are digital banks; and eight are NBFIs.

The BSP has targeted to migrate 50 percent of all payment transactions into digital form by the end of 2023 and it looked like this goal has been achieved, according Tangonan. The report will be released in July this year as the BSP is still finalizing the data.