By: Ian Nicolas P. Cigaral, Inquirer.net
MANILA, Philippines — Lowering fees can significantly increase the use of digital payments, a new survey found, suggesting that payment pricing affects more than the cost of a transaction.
A survey of 15,000 mobile banking users at Rizal Commercial Banking Corp. (RCBC) showed that users doubled their transactions after the bank reduced fees to zero. In another RCBC mobile banking platform, users increased their transactions by about 30 percent.
MANILA, Philippines — Lowering fees can significantly increase the use of digital payments, a new survey found, suggesting that payment pricing affects more than the cost of a transaction.
A survey of 15,000 mobile banking users at Rizal Commercial Banking Corp. (RCBC) showed that users doubled their transactions after the bank reduced fees to zero. In another RCBC mobile banking platform, users increased their transactions by about 30 percent.
Innovations for Poverty Action (IPA) Philippines, in partnership with the Bangko Sentral ng Pilipinas (BSP) and RCBC, conducted the study. They randomly assigned customers different InstaPay fee levels for the survey, including zero and low fees.
RCBC said the findings aligned with the BSP Consumer Expectation Survey, which showed one in three Filipinos consider high fees a barrier to more frequent use of digital payments.
The central bank released the results months after ordering financial institutions to lower fees for digital payments. Under BSP Circular No. 1238, banks and other BSP-supervised financial institutions must ensure that fees for person-to-person digital fund transfers between accounts held at different institutions do not materially differ from those charged for transfers between accounts within the same institution.
Because transfers between accounts within the same bank or e-wallet are typically free, the central bank said any additional fee for interbank or interwallet transfers should largely reflect charges paid to the network switch operator.
The BSP also said that while institutions may adopt differentiated pricing based on legitimate business and operational considerations, they must ensure that their fee structures do not result in one group of users unfairly subsidizing another.
“So, [for] people who weren’t using InstaPay in the months before our study, does offering lower fees activate non-users? Yes, we also see that effect,” said Russell Toth, principal investigator at IPA and an associate professor of economics at the University of Sydney.
“The effect isn’t massive, but measurable and noticeable,” Toth added.
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