Banks urged to cut remittance fees

December 31, 2010: MANILA, Philippines – The Banko Sentral ng Pilipinas wants banks to further reduce remittance fees, urging them to consider the welfare of families of overseas Filipino workers (OFWs).

“The remittance fees can go down further; banks have leeway to cut the rates,” BSP Deputy Governor Diwa Guinigundo told reporters before the holiday break.

The central bank executive said reducing remittance charges would encourage OFWs to send more money to their beneficiaries. Remittances are a big boost to the Philippine economy, fueling household consumption.

In the first 10 months of the year, remittances reached $15.5 billion—up 7.9 percent year-on-year.

Banks’ remittance fees range from P150 to P550 per transaction, depending on the amount of remittance and the country of origin.

But a few banks that have started to use the Philippine payment and settlement system (PhilPaSS) of the BSP now charge only P50 per transaction, the central bank said.

PhilPass, an electronic system that clears check payments to and from banks the BSP regulates, has been designed specifically to bring down remittance costs.

A bank that hooks up to the PhilPaSS may electronically send remittance to a branch near the location of a recipient. This way, banks need no longer have to hire couriers to deliver remittances received at the head offices.

The BSP expects remittances sent through formal channels (banks, registered money transfer companies) to continue to grow in 2011, specifically to reach over $20 billion. Michelle V. Remo, Philippine Daily Inquirer