Philippines' BSP weighs subscription-based model for digital transactions

The Bangko Sentral ng Pilipinas (BSP) is considering a shift to a subscription-based fee model for small electronic fund transfers, including e-wallet payments, as a potential replacement for transaction fees.

BSP Governor Eli Remolona Jr. said that by moving away from per-transaction fees, the Philippine central bank aims to maximise the benefits of network externalities, where each new participant adds value to the system. By adopting a subscription-based model, costs would remain fixed, he explained.

"If you look at the payment system, every time you add one more participant, that's a cost. It's a small cost, but that extra participant adds value to the whole system. You have a bigger network of participants," Remolona said in a recent event, as quoted by government-owned Philippine News Agency.

Don't miss: Alipay+ enables digital payment of 14 overseas e-wallets in HK

The proposal aligns with BSP's broader goals of promoting financial inclusion and reducing transaction fees for individuals and small businesses. The central bank has previously advocated for eliminating fees on person-to-person electronic fund transfers and payments to microenterprises, particularly for transactions below a certain threshold, which has yet to be determined.

Remolona emphasised that the current fee structure may not be ideal. "It's not about the fees per transaction. I think that's the wrong model," he stated. Instead, a subscription fee could better balance costs and expand the payment system's accessibility.

To refine the approach, BSP is in discussions with key digital payment providers in the country such as GCash and Maya, according to Remolona.

In line with the Philippine Development Plan, the central bank aims to have online payments account for 60-70% of the country's total retail transaction volume by 2028.

The combined volume of transactions processed through InstaPay and PESONet - automated clearing houses launched in December 2015 under the central bank's National Retail Payment System framework - rose by 62.3%, reaching 1.34 billion pesos (US$22.9 million) from January to November last year, compared to 824.86 million pesos (US$14.1 million) during the same period in 2023.

Related articles:
HK's FPS accepted in Thailand amid cross-border digital payment collab
Mastercard and WeChat Pay join forces to enhance digital payment experiences for visitors to ChinaNew World Development and Visa join forces to elevate digital payment experience for consumers