THE PHILIPPINES is still on track to achieve its digital payment target by 2028, as banks and electronic wallet providers waive or cut transfer fees, the Bangko Sentral ng Pilipinas (BSP) said.
“Yes, yes. We will continue to plow along until we reach that goal,” BSP Deputy Governor Mamerto E. Tangonan told Money Talks with Cathy Yang on One News when asked if the 2028 goal is still achievable.
The BSP wants digital payments to account for 60%-70% of the total volume of retail payments by 2028 in line with the Philippine Development Plan.
Mr. Tanongan noted that banks’ digital transaction volume has increased by up to 50% as existing customers do more online transactions and banks onboard new users amid the transfer fee waivers.
The BSP deputy governor said the central bank’s decision to nudge banks regarding transfer fees came as they saw flat annual growth of online payments.
“(W)e noted that the growth of digital payments year on year has more or less approached a plateau,” Mr. Tangonan said. “And so, we said that we need a breakthrough. We need a second wind in order to propel the greater usage of digital payments, especially to those who are still nonusers.”
In 2024, digital payments made up 57.4% of the country’s total monthly retail transaction volume (from 52.8% in 2023) and 59% of the combined value (from 55.3% in 2023), according to BSP’s latest Status of Digital Payments in the Philippines report.
The central bank has not released the 2025 digital payments data.
Mr. Tangonan said the latest BSP regulation is expected to encourage more people to use formal digital payment channels by reducing the transaction costs associated with digital wallets and banks.
“What we want is to bring more people into the formal economy. So, we know that digital payments can increase GDP (gross domestic product) per capita and also reduce informality. So, these are our goals,” Mr. Tangonan said.
BSP Governor Eli M. Remolona, Jr. previously said that financial institutions’ lower digital transaction costs will improve the Philippines’ payment system and broaden the digital economy. He welcomed banks and e-wallets’ recent announcements, noting that it would even be better if they could bring InstaPay and PESONet transfer fees down to zero.
BSP Circular No. 1238, issued last month, directed financial institutions like banks, e-wallets, and other payment service providers to adopt reasonable, fair, and market-based pricing for retail digital fund transfers.
Under the new rules, fees charged for person-to-person transactions between different institutions should not materially differ from charges for transfers within the same entity, with the switch cost being the only allowable pricing difference from its intrabank transfer fees.
Switch cost refers to the fee charged by a clearing switch operator to process interbank transactions, which the BSP said is typically around P1.50.
The new regulation took effect on July 4.
Mr. Tangonan also noted that increased digital payments use among consumers amid lower transfer fees may urge more merchants to adopt digital payments eventually.
“So, we bring in more and more people into not only the digital payments system, but also the formal financial services where they can access other services that will give them the tools to help them protect or increase their wealth,” he added.
Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the industry’s move to scrap transfer fees can help boost the country’s digital economy.
However, he noted that it could also slightly dampen the profitability of institutions reliant on transaction costs.
“Fee waivers are a modest headwind to bank profitability, particularly for institutions more reliant on transaction fees, but they could be positive for financial inclusion, digital adoption, and long-term customer acquisition,” Mr. Ravelas said via Viber.
“My view is that free transfers can accelerate usage, particularly among lower-income consumers, small businesses, and frequent fund transfer users who are very price sensitive. More importantly, it encourages habitual use of digital channels, which is what ultimately drives adoption,” he added.
For Mr. Ravelas, the BSP is now likely closer to the lower end of its digital payments target with the boost from free transfer fees, but noted that achieving 70% will require more system-wide developments.
“Infrastructure reliability, cybersecurity, internet connectivity, and user trust remain just as important as fees,” he said. — Katherine K. Chan
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