Banks to use system that will cut remittance fees

MANILA, Philippines - Three of the Philippines’ top ten biggest lenders have agreed to use an electronic settlement system that will reduce remittance fees for Filipinos sending money home.

Remittances coursed through Banco de Oro Unibank Inc. (BDO), the Philippine National Bank (PNB), and the Development Bank of the Philippines (DBP) will be processed through the Philippine Payments and Settlements System (PhilPass).

PhilPass, a real-time, electronic system owned and managed by the Bangko Sentral ng Pilipinas (BSP), is faster, safer, and cheaper.

All three lenders have agreed to pass on savings earned from using the system to their customers, the BSP said.

However, the Bank of the Philippine Islands (BPI) has allegedly refused the arrangement, a source familiar with the matter said.

Banks remitting money from overseas Filipino workers (OFWs) levy as much as P250 per transaction if their beneficiaries in the Philippines do not have an account in the same bank.

The fees reportedly cover costs involving the physical transfer of cash to the beneficiary bank, which may involve messengers.

The Ayala-led lender supposedly intended to maintain this arrangement, sources said.

This, in turn, has prompted the BSP to propose an agreement to make PhilPass as the settlement arm of OFW remittances, BSP deputy governor Armando L. Suratos said.

Discussions between the Association of Bank Remittance Officers Inc to (Abroi) have begun, he said.

Abroi’s members include PNB, BDO, BPI, the Land Bank of the Philippines, Rizal Commercial Banking Corp., China Bank, Allied Bank and Metrobank.

The BSP is also in talks with banks to unify back-end processing fees charged for crediting the account of beneficiaries for remittances from other lenders.

“PhilPass is owned by the BSP so we were actually planning to charge a transaction fee of only P5 so that would not justify such a huge fee on OFWs sending money home," said the source. “If we could get all the banks to agree, we were planning to offer this for free to OF clients."

Although banks handle more than $1 worth of OFW transactions each month, costs of processing have also become significant.

OFW accounts are often exempt from maintaining balances in their accounts, or sometimes even doing away with an initial deposit requirement.

As a result, banks can only make money if they continue to keep charging those sending remittances home.

While the BSP will not force banks to eliminate remittance processing fees, it nevertheless said that there is no reason to keep these fees at such high levels. - GMANews.TV

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