MANILA, Philippines — The Bangko Sentral ng Pilipinas approved the lifting for six months of the service fee charged on banks that facilitate the sending of remittances from Filipino migrants using the BSP’s Philpass system.
BSP Governor Amando Tetangco Jr. said the move will reduce the cost of sending or receiving remittances, something that is consistent with the goal of encouraging the sending of remittances through formal channels.
Philpass is the electronic clearing system for inter-bank transactions, such as check payments, and transactions between banks and the BSP.
In December 2009, the central bank and industry members signed an agreement allowing the use of the same system to facilitate the sending of remittances starting 2010.
Prior to the decision of the BSP to temporarily waive the service fee, each transaction involving the sending of remittances using Philpass was charged a fixed amount of P50. The decision to waive the fee for six months was made during the meeting of the BSP’s Monetary Board last week.
“The Monetary Board has approved the waiver for six months. This will help enable banks to lower their remittances fees,” BSP Governor Amando Tetangco Jr. said over the weekend.
Under the agreement between the BSP and industry members, a bank that receives a remittance from abroad shall use the central bank’s Philpass system to electronically transfer the money to another bank, which is closer to where the intended beneficiary resides.
Prior to the signing of the agreement, many banks transfer money to another bank through courier service, which Tetangco said has been costlier and has required more time for settlement than electronic means.
The use of the Philpass system has also made the sending or receiving of remittances much less costly. Previously, banks were paying a fee ranging from P100 to P550, depending on the amount of remittance, to facilitate the sending of remittances.
The central bank chief said that with lower cost, even more Filipinos would be encouraged to use the banking system rather than informal channels to send remittances to their families and other intended beneficiaries
The BSP estimates that three to four percent of total remittances annually are sent through informal channels, much lower than the 30 percent estimated at least five years ago.
“With this project, the percentage share of remittances sent through informal channels could go down even further,” Tetangco said.
He said the central bank pushed for this project to help OFW families, who have been burdened by still high remittance cost.
Remittances are considered a big boost to the Philippine economy, helping it avoid a recession last year. BSP estimates said remittances, which stood at $17.3 billion in 2009, were equivalent to 10 percent of the country’s gross domestic product.
By Michelle Remo
Philippine Daily Inquirer