The Bangko Sentral ng Pilipinas (BSP) is mulling over removing fees for small-value fund transfers, and reducing the reserve requirement of local lenders.
BSP Gov. Felipe Medalla tweeted on Feb. 25, 2023, that they are “ready to work with the (banking) industry to find ways to eliminate fees on small-value fund transfers and incentivize more Filipinos to use #digitalpayments. If the fee is P15 for a P200 transaction, then the fee is quite large relative to the amount being sent.”
The central bank should pursue its plan because it can certainly encourage more Filipinos to engage in digital payments.
The use of digital payments in the Philippines accelerated at the height of the pandemic in 2020 during which mobility of most Filipinos was limited due to restrictions imposed by the government.
At some point, the BSP suspended certain online banking charges to ease the financial burden of Filipinos. Fees for digital transactions were eventually reinstituted by traditional and non-traditional banks in 2021.
Current transaction fees range from as low as P10 to as high as P25. There are non-traditional or digital banks (banks that entirely operate online and do not have physical branches) that don’t charge for a fund transfer. It is perhaps part of their marketing strategy to attract more clients.
In the first half of 2022, the BSP reported that transactions processed by digital banks reached P8.5 billion.
Also, a January 2022 report of the Philippine News Agency quoted then BSP governor Benjamin Diokno, who said that as of the first quarter of 2021, there were around 53 percent of adult Filipinos who had electronic money (e-money) accounts, higher than the 29 percent in 2019. Diokno, now the finance secretary, said the number was encouraging.
Just like the central banks in other countries, BSP is pushing for digital payments because it has so many upsides.
Banking experts have said that digital payments are efficient—more convenient than traditional payment methods such as cash and checks; encourage financial inclusion—provide access to financial services for underserved and unbanked populations; secure—digital payments are more secure than cash, as they are less susceptible to theft and fraud; and help central banks formulate their future monetary policies—digital payments provide them with better data and monitoring capabilities, allowing them to implement more effective monetary policies.
In an increasingly online world, digital payment is definitely part of the future.