Big commercial banks with huge remittance businesses are reducing the fees it charges on back-end services by 50 percent.

The Bangko Sentral ng Pilipinas (BSP) and the Association of Bank Remittance Officers (ABROI) will sign a memorandum of understanding on December 2 to cut the fees on fund transfers by using the BSP’s real time gross settlement system, also known as the Philippine Payments and Settlement Systems (PhilPaSS).

BSP Deputy Governor Diwa C. Guinigundo said the MOA, which had been approved in principle last August, will be formally signed next week to implement standardization and reduction of banks back-end processing fees.

“(After December 2) BSP shall charge only P5 to the banks and the banks will only charge maximum of P50 to their clients for back-end services,” said Guinigundo.

“The use of RTGS of the BSP is instrumental in this,” he added.

At the moment, banks charge P100 to as much as P400 per transaction since banks still use third parties to remit the cash to the beneficiaries for same day deliveries. By using PhilPaSS, remittances can be received within the same day at lower costs.

The central bank has been encouraging ABROI bank members Banco de Oro Unibank, Metropolitan Bank and Trust Co., Bank of the Philippine Islands, Philippine National Bank, Land Bank of the Philippines, Rizal Commercial Banking Corp. and China Banking Corp. to course remittances through the PhilPaSS.

The central bank has lowered the charges on remittances for those that are credited to bank accounts of the beneficiaries in banks that are not their receiving banks.

The BSP has been encouraging Filipino migrant workers to send fund transfers through banks because it is cheaper and safer than door-to-door or other informal channels of remitting their hard-earned cash.

As of end-September, remittances sent by overseas Filipinos amounted to $12.79 billion. The full-year forecast is $17.1 billion and $18.1 billion in 2010.