BSP Presses GCash, Maya on P10 Transfer Fees: Explain!

The Bangko Sentral ng Pilipinas (BSP) is pressing the country's two largest e-wallet providers, GCash and Maya, to explain their P10 fee for InstaPay transfers to other banks and wallets. This comes as a growing number of universal and commercial banks have begun offering free InstaPay transfers, aiming to reduce barriers in the digital payments ecosystem. BSP Deputy Governor Mamerto Tangonan acknowledged that both GCash and Maya have reduced their fees from P15 to P10, but emphasized that further justification is required. While the e-wallets have submitted itemized cost breakdowns, the central bank is meticulously reviewing them. Tangonan indicated that fees directly associated with "switching costs" might be justifiable, but cautioned that the process would take time. "Don't expect a result next week because this will take an exchange of information," he stated, declining to set a specific timeline. The BSP is concerned about "regulatory arbitrage," where e-wallets might operate under different fee structures than traditional banks. This could incentivize banks to route services through e-wallet affiliates if wallets are given more leniency, potentially hindering the overall flow of the financial system. "It is the plumbing of the financial system. You will reduce the actual flow that you get because there are some bottlenecks. We don't want to do that in a network. We want to protect the interoperability of the network," Tangonan explained. Regarding revenue streams, the BSP hinted that e-wallets could leverage their existing financial products beyond simple transfers, such as savings accounts, loans, and merchant services, which already carry commercial value. Furthermore, transaction data can enhance credit assessment capabilities, enabling e-wallets to offer more tailored financial products. "There are commercial benefits there. It's not given for free," Tangonan noted. GCash and Maya are left with three primary options. First, they can make InstaPay transfers free or reduce the fee to reflect direct switching costs. Second, if they wish to maintain the P10 fee, they would need to introduce a similar fee for transfers within their own ecosystems, a move likely to be unpopular with users. Third, they must present a compelling case to the BSP that costs beyond basic switching are unavoidable and directly attributable to inter-institution transfers, a difficult task given the BSP's awareness of actual switching costs. This regulatory scrutiny unfolds as both fintech giants are reportedly preparing for potential stock market debuts, making profitability and clear business models crucial for investor confidence. Source: Rappler Business