BSP says Circular 1238 allows transfer fees if banks and e-wallets can justify costs

What Circular 1238 Allows

According to Fintech Alliance PH, the BSP described Circular No. 1238 as a cost-based fair pricing rule rather than a zero-fee mandate. That means institutions offering transfers through services such as InstaPay are not automatically required to remove charges from customers.

The clarification comes after some confusion in the market. When the circular was introduced, several traditional banks dropped online transfer fees, while e-wallet platforms including GCash and Maya reduced their InstaPay charges to ₱10. The differing approaches led to questions about whether all providers were expected to move to free transfers.

How Fees Can Be Calculated

Early interpretations suggested that transfer pricing might be limited to the direct network cost of a transaction, estimated at about ₱1.50 each. The BSP’s clarification indicates the framework is broader than that.

Financial institutions are allowed to include a range of operational expenses in their pricing models. These may cover server infrastructure, system uptime maintenance, cybersecurity protections, anti-fraud measures, and customer support operations. In practice, this means a transfer fee does not have to match only the underlying network charge, provided the provider can show that the total price is based on legitimate costs.

Why Banks and E-Wallets Price Differently

The source article points to a business model gap between traditional banks and e-money issuers. Banks often earn from lending, mortgages, and credit cards, which can make it easier for them to absorb a small transfer cost as part of retaining customer deposits within their ecosystem.

E-money issuers, by contrast, depend more heavily on transaction-related income and payment processing. Under that structure, a compulsory zero-fee regime could leave wallet operators handling a very large number of transfers without recovering the related expenses.

Consumer Protections Still Apply

Even without a universal zero-fee rule, the BSP’s framework still includes safeguards intended to prevent arbitrary pricing. Institutions are required to keep internal cost analyses supporting their fees, and those pricing models are subject to BSP review, according to Fintech Alliance PH.

The circular also preserves no-fee treatment for certain small-business payments. Digital payments made to micro-merchants with annual earnings below ₱250,000 remain free under the framework. The source article also argues that allowing providers to charge reasonable fees can help support service reliability, particularly during periods of heavy transaction volume.

The clarification leaves consumers with a more limited takeaway than some had expected: free transfers are possible, but not required across the board. Instead, the BSP appears to be focusing on whether charges are justified by real costs, while still protecting specific low-income merchant transactions from fees.