With more banks slashing fees on digital fund transfers, the country’s largest group of financial technology (fintech) companies stressed that these fees remain integral to sustaining the operations of smaller firms and strengthening the security of online payments.

Fintech Alliance.ph Chairman Lito Villanueva said most banks and electronic money issuers (EMIs) have complied with the recent pricing policy of the Bangko Sentral ng Pilipinas (BSP), which requires transfer fees to reflect actual costs.

However, he emphasized that business models vary across the industry, noting that larger banks are better positioned to absorb zero transfer fees because they earn from lending, insurance, and other revenue streams.

This is not the case for many EMIs and smaller fintech firms, which rely more on fee-based income to sustain their operations, Villanueva said.

He noted that digital fund transfers involve costs before, during, and after a payment is routed, including customer authentication, fraud screening, compliance checks, settlement, and customer support.

“Transaction fees are not based solely on switching costs but also reflect the infrastructure and services required to complete a secure and reliable digital payment,” he said.

With transfer fees, Villanueva said fintech firms are more financially equipped to implement the necessary fraud prevention systems and cybersecurity upgrades to protect consumers.

“These fraudsters are one or two steps ahead of us. So if they're upgrading, we have to be two or three steps ahead of them in terms of updates. None of these upgrades are free. That's why we have to invest," he said.

Villanueva also said that investments are necessary to maintain payment services in previously underserved communities, particularly those without access to traditional banking infrastructure.

He noted that keeping these services running "requires continuous investments that must be considered alongside switching costs when determining transaction fees."

The BSP earlier issued Circular No. 1238 to ensure that fees on digital fund transfers remain fair and aligned with actual service costs. (Dexter Barro II)