Wise flags hidden forex markups in remittances

MANILA, Philippines — Global payments firm Wise is in discussions with the Bangko Sentral ng Pilipinas (BSP) to strengthen transparency in remittance pricing, particularly on foreign exchange markups that may not be immediately apparent to customers sending money across borders.

Wise Philippines country manager Areson Cuevas said greater transparency remains one of the biggest challenges in lowering the cost of international money transfers despite existing BSP rules requiring financial institutions to disclose remittance charges.

“We are in heavy discussions with the BSP on how to ensure that local participants or local banks in the Philippines show transparent rates whenever their customers do a remittance transaction,” Cuevas said during a roundtable discussion.

He said Wise has a dedicated team engaging central banks and other regulators globally on policies aimed at making cross-border payment costs more transparent.

According to Cuevas, the BSP already has regulations requiring financial institutions to disclose information related to remittance transactions, although Wise wants greater awareness and implementation of the existing framework across the industry.

Under Section 298 of the BSP’s Manual of Regulations for Banks, banks providing overseas remittance services are required to disclose to senders and recipients the transfer or remittance fee, exchange rate and exchange rate differential or spread.

The rules define the exchange rate differential or spread as the foreign exchange markup, or the difference between the prevailing BSP reference or guiding rate and the exchange or conversion rate offered to customers.

Banks must also disclose other currency conversion charges, other related fees, the exact amount and currency to be received by the beneficiary and the expected delivery time.

A corresponding provision under Section 251-Q of the Manual of Regulations for Non-Bank Financial Institutions imposes similar disclosure requirements on BSP-supervised non-bank entities providing overseas remittance services.

Cuevas said Wise is not seeking an entirely new framework, but wants greater transparency under regulations that are already in place.

The push comes as Wise estimates that Filipino consumers and businesses lost around P50 billion to foreign exchange markups on cross-border transactions in 2024.

Cuevas earlier said average costs for moving money across borders remain at around three to five percent, compared with Wise’s average charge of about 0.5 percent.

Of the P50-billion estimate, around P10 billion represented losses incurred by personal customers while roughly P40 billion came from businesses, based on the company’s independent studies.

Cuevas said the amount could be reduced if customers are given clearer information on how much they are paying when converting currencies and sending money internationally.

Wise has also cited low consumer awareness as a hurdle, with only 21 percent of Filipinos aware that remittance transactions may include foreign exchange markups.

“If you’re talking about the bottleneck, it’s really ensuring that the BSP or any other global central banks listen to our call to make sure that customers know what they are paying for when they do their remittances,” Cuevas said.

Meanwhile, Wise is also looking to expand its digital payment options in the Philippines after introducing Google Pay integration last year.

Cuevas said connecting Wise to Apple Pay is also part of the company’s plans, although he declined to provide a timetable for a launch.

“It’s in the plan. Hopefully, we can do it,” Cuevas said.