BSP moves to lower fees on digital fund transfers

THE BANGKO SENTRAL ng Pilipinas (BSP) is moving to lower digital transaction costs as it released new rules requiring financial institutions to adopt “reasonable” fees for retail fund transfers while also mandating zero fees for small merchant payments.

BSP Circular No. 1238 Series of 2026 signed by BSP Governor Eli M. Remolona, Jr. on June 17 amends rules on pricing mechanisms for fees imposed on person-to-person (P2P) electronic fund transfers (EFTs).

It said that BSP-supervised financial institutions (BSFI) should adopt a “reasonable and fair market-based” pricing mechanism for consumer transfer fees, which should have quantitative support such as an analysis of the actual costs incurred in delivering electronic payment products and services.

The central bank added that fees charged for off-us person-to-person transfers, or those where the sender and receiver have accounts with different financial institutions, “should not materially differ” from those charged for on-us transactions, or transfers between accounts under the same BSFI and the actual switch cost incurred as a result of an off-us transaction.

Switch costs are charges imposed by a clearing switch operator to process these transfers.

“The pricing mechanism should be designed to uphold fairness across end-user groups. While differentiated pricing may be implemented based on sound business and operational considerations, BSFIs shall ensure that fee structures do not result in one user group unreasonably subsidizing the cost of serving another,” the BSP said.

It added that service fees for electronic payments must be lower than those charged for over-the-counter transactions “as electronic payments are considered to provide more efficient and cost-effective means of delivering service.”

“For P2P EFTs, recipients shall receive the full amount as credit to their accounts, free of any charges or deductions.”

The circular added that operators of payment systems with merchant acquisition licenses, or those that have merchant payment acceptance activities, should also have a “reasonable, transparent, market-based” pricing mechanism for the fees they charge merchants that avail of their services. This should also be supported by a cost analysis.

With the issuance of this circular, BSP Memorandum No. M-2026-025 signed by BSP Deputy Governor Mamerto E. Tangonan lifted the moratorium on the increase in transfer fees for InstaPay and PESONet transactions imposed in 2021, which was meant to help encourage the shift to cashless payments.

“The lifting of the moratorium is grounded in the implementation of zero fees for small merchant payments, and the establishment of a pricing structure for person-to-person electronic fund transfers under the circular, which aims to reduce fees for this segment and provide parameters for responsible pricing and market conduct,” Mr. Tangonan said.

“Consistent with the BSP’s broader policy direction to promote digital payments, financial inclusion, and innovation, the lifting of the moratorium enables a more responsive and sustainable pricing environment, while ensuring that adequate regulatory oversight and consumer protection mechanisms remain firmly in place.”  

GOVERNMENT PAYMENTS, REMITTANCES
This comes as Finance Secretary Frederick D. Go said lowering the service fees charged by financial institutions for processing electronic transfers could help reduce the cost of transacting with the government and sending remittances.

“Apparently in India, when you send money, to and from, on digital, the cost is equivalent to something like, I think 10-20 centavos,” he told reporters on Tuesday.

“When people deal with the government and they’re paying the government, why is there a convenience fee of P50, and some are even higher? So, it’s one of the legacies I want to do — to bring down that transaction cost.”

He said the goal is to reduce fees to a level that reflects only the minimal charges imposed by clearing switch operators.

Mr. Go said high transaction fees also affect remittances from overseas Filipino workers.

“I have been chatting with a lot of the Filipinos abroad and they say that when they bring home money, they’re charged 8% or 10%, some ridiculous amount,” he said.

“So, all this bothers me. Why, in this day and age of digital transactions, why does it cost them 8% or 10% to send money home?”

For their part, Land Bank of the Philippines (LANDBANK), which the Finance chief chairs, has already taken steps to reduce transaction costs by cutting transfer fees to P8 from P15 and temporarily waiving convenience fees for eligible person-to-government transactions until Dec. 31.

Mr. Go added that the bank could indefinitely extend the waived convenience fees for government transactions if “it makes financial sense for LANDBANK.” — Katherine K. Chan and Justine Irish D. Tabile