Digital Banks, Fintechs Push Back on Zero Transfer Fees

Digital banks and fintech companies in the Philippines are pushing back against calls for permanently free fund transfers, asserting that the Bangko Sentral ng Pilipinas (BSP)’s new pricing framework allows financial institutions to charge fees based on the actual cost of providing digital payment services. The Digital Bank Association of the Philippines (DiBA PH) stated that BSP Circular 1238 does not mandate zero fees but instead adopts a cost-based pricing framework for electronic fund transfers. “This provides greater regulatory certainty for digital banks as they continue investing in secure payments, savings, responsible credit and other digital financial services that deepen financial inclusion,” the group said. “DiBA supports the BSP’s balanced approach, recognizing that affordability, consumer protection, innovation and long-term sustainability go hand in hand in building a resilient and competitive digital banking ecosystem,” it added. The BSP had earlier clarified that compliance with the circular does not automatically mean banks and electronic money issuers must remove transfer fees. Instead, institutions must justify the amount they charge based on the costs involved in processing transactions. Fintech Alliance Philippines founding chairman Lito Villanueva said the industry supports efforts to make digital payments more affordable, but stressed that the circular was designed around a cost-based rather than a zero-fee framework. “Of course, this is a good initiative of the BSP in making digital payments affordable,” Villanueva said. However, he said the BSP circular is “more focused on a cost-based over a zero-based framework.” “It’s more about having to ensure that affordability plus security are actually together,” he told reporters. Villanueva said low-cost digital payments should not come at the expense of consumer protection, cybersecurity and the operational reliability of payment platforms. He also noted that while many banks have already waived fund transfer fees, free transactions do not mean that providers no longer incur costs. He said financial institutions offering free transfers may instead seek other revenue sources by deepening customer engagement and cross-selling other financial products. Under Circular 1238, banks and electronic money issuers must submit a breakdown of the costs used to determine their transfer fees. “They just need to provide the BSP the breakdown of the cost that will constitute the transfer fee,” Villanueva said. “They need to justify that if it is P10 or P15 or whatever.” Villanueva said transaction costs extend beyond the industry switch fee and may include settlement, clearing, customer service and dispute handling, particularly for off-us transactions or transfers involving different financial institutions. The debate over digital payment fees has intensified as more banks and financial technology companies offer temporary or permanent fee waivers to attract customers and encourage greater use of online transactions. Industry leaders have maintained that affordability should remain a central part of financial inclusion, but argued that regulation should also allow providers to sustain investments in cybersecurity, fraud prevention, customer support and operational resilience. Barbie Dapul, chief operating officer of G-Xchange Inc., said trust is the foundation of digital finance. “Financial inclusion is meaningful only when people trust the system. Every secure transaction, every fraud prevented, every customer concern resolved and every innovation introduced reflects continuous investment in protecting consumers.” She added that inclusion should be measured not only by the number of accounts opened but by the quality, safety and reliability of the services people use every day. Angelo Madrid, president and CEO of Maya Bank, said sustainable competition depends on recognizing that banks, digital banks and electronic money issuers operate under different business models and regulatory obligations. “A progressive regulatory environment encourages innovation while recognizing that different institutions contribute to financial inclusion in different ways. The objective is a level playing field that benefits consumers and strengthens the financial system.”