Subscription fee on digital transactions mulled

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. has announced that the central bank is exploring a subscription-based model for digital transaction fees to enhance the efficiency and inclusivity of the country’s payment systems.

Speaking at a Rotary Club event in Makati City recently, Remolona explained the rationale behind the proposed shift. 

“In a payment system, every additional participant adds a small cost but also increases the network’s overall value. This is known as a network externality. To maximize this value, we’re exploring a fee structure that relies less on per-transaction charges and more on a fixed subscription fee,” he said.

He added that this model could enhance financial inclusion by creating a more accessible and extensive digital payment network.

The BSP has previously expressed its intent to eliminate transaction fees for person-to-person electronic fund transfers and payments made to small businesses as part of its drive to expand digital payments across the country.

Remolona provided further insight into the current fee structure. “At present, merchants bear the cost of transaction fees, which are indirectly passed on to consumers through product pricing. For person-to-person transactions, we are considering making these fees zero, up to a certain threshold that is yet to be determined,” he said.

However, Remolona emphasized that the issue goes beyond per-transaction fees. “The current model is not optimal. Due to network externalities, a subscription-based fee structure, which is fixed rather than per transaction, may be more effective,” he explained.

The BSP is in discussions with key digital payment providers, including GCash and Maya, to refine this approach. “We’re collaborating with all stakeholders to agree on a framework that benefits everyone,” Remolona said.

The proposed subscription model aims to make digital payments more affordable and accessible, aligning with the BSP’s goal of fostering greater financial inclusion in the Philippines.