BSP waives fees on interbank fund transfer

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has waived the fees of fund transactions made through the central bank until the end of the year, allowing banks and financial institutions to promote digitalization amid the changing economic landscape due to the pandemic.

BSP Deputy Governor Maria Almasara Cyd Tuaño-Amador said it is critical for banks to continue to be able to effectively provide financial services and promote the digitalization of payment services as the  economy strives to recover from the severe effects of the  coronavirus disease 2019 or COVID-19 pandemic.

“This measure is intended to provide further support for the efficient operations of financial institutions and foster a supportive environment within which BSP-supervised entities can extend improved financial intermediation services to the public and encourage the wider and broader use of digital payments,” she said.

Amador issued Memorandum 2020 – 048 extending the waiver of fees of fund transfer transactions made through the central bank’s Philippine Payment and Settlement System (PhilPaSS) until the last business day 2020.

The BSP first extended the regulatory relief on real time fund transfer system transactions among banks and non-banks under the PhilPaSS on April 1 to 30 via Memorandum No. 2020 – 027. The measure was extended four times to May 15, then to May 29, to June 11, and until the end of the year.

PhilPaSS is a real time gross settlement (RTGS) system owned and operated by the BSP that processes and settles interbank high value payment transactions of 168 participating banks through the demand deposit accounts of the bank maintained with the central bank.

Covered transactions include interbank, peso-leg of US dollar trades, peso-leg of government securities trades, Philippine Clearing House Corp. (PCHC) transactions, ATM transactions, and manual processing of interbank transactions.

Amador said the central bank strongly encourages the participants to actively disseminate to the public the available automated clearing houses such as InstaPay and PESONet, as well as PhilPaSS as facilities to electronically transfer funds to target recipient-accounts maintained with other banks, thereby providing Filipinos a wide range of digital payment channels.

BSP Governor Benjamin Diokno said earlier the volume and value of InstaPay and PESONet spiked when the enhanced community quarantine was in effect for the months of April and May.

Data showed the volume of InstaPay and PESONet surged  by 84 percent, while its value increased by 24 percent in April and May.

“This trend indicates a shift from cash-based transactions to digital payments given the limited physical mobility, shortened operating hours of financial institutions, and the public’s avoidance of face-to-face transactions during the enhanced community quarantine,” Diokno said.

InstaPay exhibited sharp growth as this real-time funds transfer facility has gained greater traction especially for online payments for goods and services and low-value remittances.

Also, the release through PESONet of the financial assistance of the Social Security System (SSS) small business wage subsidy (SBWS) to millions of employees affected by the COVID-19 pandemic has contributed to the observed surge in volume and value.

Moreover, the waiver of the fees for electronic fund transfers during the lockdown has encouraged usage of InstaPay and PESONet.

Diokno is looking at increase the level of digital payments to 50 percent of total transactions in terms of volume and value by 2023.

Data from the Better Than Cash Alliance (BTCA) showed the number of e-payment transactions in the country increased to 10 percent in 2018 from only one percent in 2013, while the value rose to 20 percent from eight percent.