BSP Clarifies No Mandate for Zero Digital Transfer Fees

The Bangko Sentral ng Pilipinas (BSP) clarified Thursday that it did not mandate banks and electronic money issuers (EMIs) or e-wallets to waive digital fund transfer fees amid its issuance of Circular No. 1238, which ordered financial institutions to reflect actual costs of fund transfers. Circular 1238, which took effect on July 4, 2026, requires that any difference between intrabank and interbank transfer fees should reflect only the cost of routing a transaction through a payment network. Such expense, called the "switch cost," is estimated at P1.50, which means that financial institutions that already have free intrabank transfers should only charge up to P1.50 for interbank transfers. Following this directive, a number of banks have since made their interbank transfers free, with majority of the top 20 financial institutions have already complied with the circular. “We are not saying zero [transfer fee]. You know, the banks thought, given the policy, they decided to make it zero but for the others they should apply that mechanism … in the circular,” BSP Deputy Governor Mamerto Tangonan told GMA News Online. “It does not say you have to set it to zero… Well, because banks set the expectation that it can be zero that’s why the customers are asking EMIs to do the same,” Tangonan said. The BSP official was asked to clarify a misconception that the Circular 1238 mandated banks and e-wallets to waive bank transfer fees. “It [Circular 1238] tells the banks and EMIs about the pricing mechanism… we did not say zero [transfer fee],“ Tangonan said. The BSP Circular 1238 states that “the pricing mechanism should be designed to uphold fairness across end-user groups,” therefore the service fees for electronic payments are expected to be lower than the fees collected from transactions made manually or over-the-counter (OTC) as electronic payments are considered to provide more efficient and cost-effective. For his part, he Fintech Alliance PH chairman Lito Villanueva said most banks and EMIs or e-wallets have already complied with the circular, but cautioned that business models differ across the industry. However, Villanueva said banks can absorb zero fees because they earn from lending, insurance and other revenue streams, while EMIs or e-wallets rely heavily on fee-based income to sustain operations, including services for unbanked communities in remote island barangays. The BSP Circular 1238 has two components: a pricing mechanism designed to make electronic fund transfer charges cost-based, and a simplified merchant onboarding framework that allows low-risk merchants—such as sari-sari stores and street vendors—to be enrolled using only a national ID in lieu of business permits, tax returns, or Securities and Exchange Commission registration. — RSJ, GMA News