High fees | Investigator’s opinion

The moratorium imposed by the Bangko Sentral ng Pilipinas (BSP) on any increase in online banking money transfer fees is good news to start the new year for many consumers, who have been forced to go digital by the pandemic and to enjoy the convenience that these digital payment systems offer, but at a steep price.

The BSP Monetary Board approved on December 23 to freeze any increase in InstaPay and PESONet fees for person-to-person remittances in a bid to encourage more people to adopt the technology and accelerate the Philippines’ transition. . to a cashless economy. The memorandum was signed by BSP Governor Benjamin E. Diokno on December 28.

PESONet, a digital funds transfer system, is seen as an electronic alternative to the check system. It allows for larger transactions over P 50,000 and is credited to the recipient at the end of a business day. InstaPay, on the other hand, is its retail counterpart and is convenient for e-commerce and other urgent consumer payment needs as it allows real-time funds transfer up to 50,000P.

However, the cost of going digital is becoming heavy for many consumers. Each transaction, even for a few hundred pesos, pays off if you deal with different institutions. The convenience offered by ubiquitous automated teller machines (ABMs) has also become expensive, especially for regular depositors who receive money from an ATM at another bank.

As consumers do more of their necessary household chores such as paying water and electricity bills, shopping for groceries and other daily necessities through the convenience of the internet, it is incumbent on regulators to be responsive. to the needs of a public already suffering from the economic impact of the COVID-19 crisis. Large financial institutions and companies offering e-wallet services made billions of pesos in net profit even during the health crisis, while people had no choice but to pay for transactions online given the restrictions. of mobility.

The BSP should review and more strictly regulate the fees charged on digital transactions – from bank fund transfers to electronic wallets such as GCash and Paymaya mobile apps, and even the ATM network – with their potential impact on the majority of ordinary consumers having need to pay for utilities and essential goods without which they cannot live. Why, for example, should someone who sends P 500 or less to an online merchant for food purchases be charged 15 P (for GCash bank transfer) to 25 P (for InstaPay) in transaction fees? The volume of transactions carried out each day alludes to the huge amount accruing to banks and e-wallet operators. In November 2021, for example, the BSP said there were 42.82 million InstaPay transactions worth 270.2 billion pesos. At a charge of 25 pesos per transaction, the amount collected by the banks was 1.07 billion pesos. The banks’ defense is that such transactions entail costs for them. But how much do they really cost? Is P25 for each InstaPay transaction or P15 for a GCash transfer justified?

Depositors who have entrusted their savings which earn very little, and which are then granted by banks in the form of loans to businesses and other borrowers at much higher interest rates, have every right to complain about these high fees. and suspect that financial institutions see these payment systems as another source of revenue.

Diokno said lifting the moratorium on increasing fees for InstaPay and PESONet would be considered by monetary authorities “when the pricing standards / guidelines are released or once the volume of digital payments reaches 40% of the total in-country retail payments, whichever comes first. “Perhaps the BSP can make the freeze on these fees permanent and actually demand the fees drop once the volume of digital payments hits its target. The BSP can also review the freeze order it imposed on new digital banking players by allowing more experienced players, local and foreign, to enter and offer more options to the public. This should increase competition and lead to improved and extended services and lower transaction costs.

At the start of the pandemic, many financial institutions waived their InstaPay and PESONet transfer fees as a relief measure for consumers hit by the economic downturn. The BSP then extended the fee waiver for fund transfers until the end of last year. Now that the fees have been reimposed, BSP may want to consider easing the burden placed on the public by these fees, either by forcing a reduction or allowing more players willing to offer far lower fares than those. that are billed today.

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