BSP sets rules on digital transaction fees

MANILA, Philippines — Banks and other financial institutions will have to justify fees on electronic fund transfers as the Bangko Sentral ng Pilipinas (BSP) set new pricing rules for digital payments, following the lifting of the moratorium on fee increases for InstaPay and PESONet transactions.

Under a circular signed by BSP Governor Eli Remolona Jr., BSP-supervised financial institutions (BSFIs) are required to adopt a policy on fees for electronic payment transactions, including the basis and quantitative support for the amount charged to consumers.

The circular, approved by the Monetary Board, establishes a pricing structure for person-to-person electronic fund transfers under the National Retail Payment System framework.

The BSP said financial institutions should adopt a “reasonable and fair market-based pricing mechanism” that is supported by an analysis of the actual cost of delivering electronic payment products and services.

This means banks and payment service providers may adjust transfer fees, but such charges should be based on costs and should remain subject to BSP oversight.

The central bank also said fees for off-us transfers, or transactions where the sender and receiver use accounts from different financial institutions, should not materially differ from on-us transfers within the same institution, except for switch costs directly linked to processing off-us transactions.

“The pricing mechanism should be designed to uphold fairness across end-user groups,” the BSP said. Fee structures should also “not result in one user group unreasonably subsidizing the cost of serving another.” 

For consumers, the circular provides that recipients of person-to-person electronic fund transfers should receive the full amount credited to their accounts, free of any charges or deductions.

The BSP also said service fees for electronic payments are expected to be lower than charges for manual or over-the-counter transactions, as digital payments are considered more efficient and cost-effective.

The circular also covers merchant payment acceptance activities. Operators of Payment Systems with Merchant Acquisition Licenses must adopt merchant fees that are “reasonable, transparent, market-based and proportionate” to the cost of services offered.

Meanwhile, a separate circular provides rules for the operation of digital financial marketplaces and the presentation of financial products and services in digital platforms.

Under the rules, a bank or electronic money issuer may operate a digital financial marketplace, subject to BSP approval. The marketplace must include at least three providers that are not affiliated with the operator’s group.

Applicants must also have an advanced electronic payments and financial services license, adequate information technology infrastructure, risk management systems and net worth or combined capital of at least P1 billion.

Both circulars will take effect 15 calendar days after publication in the Official Gazette or a newspaper of general circulation.