Banks' remittance charges will be lowered by more than 10 times starting in the second quarter of the year when the Bangko Sentral ng Pilipinas (BSP) starts implementing the reduced cost of its real time gross settlement for participating banks, which will not charge fees higher than P100 per transaction.

BSP Governor Amando M. Tetangco Jr. said they plan to fully implement the reduced charges on its RTGS or the Philippine Payments and Settlement Systems (PhilPaSS) in the next two months which would enable overseas Filipinos to save significantly per transaction in remittance fees.

"It's now in the test stage (and) the target for implementation is second quarter," said Tetangco.
The participating banks are members of the Association of Bank Remittance Officers (ABROI) which signed an agreement with the BSP last December 2 to charge a significantly lower standard back-end processing fee of P50 per remittance transaction. The back-end processing fee normally charged ranges from a low of P100 to a high of P550 per transaction.

In the meantime BSP Deputy Governor Armando L. Suratos said earlier that the BSP is expanding the list of banks that will transact remittances through PhilPaSS. These are banks that are not members of ABROI.

Presently ABROI has 11 members including 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.

The BSP had wanted to implement the lower charges by March but there were systems that had to aligned first before full implementation.

BSP data show that remittance transactions average 66 million per year, of which transmission through "credit-to-other banks" accounts for eight percent or an average of more than 5,000 transactions daily.

By using PhilPaSS, remittances can be received within the same day at lower costs.

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.

For this year, the BSP is projecting total remittances to reach more than $18 billion. In 2009, total fund transfers increased by 5.6 percent to $17.3 billion.

The major sources of remittances were the US, Canada, United Kingdom, Saudi Arabia, Japan, Singapore, United Arab Emirates, Italy, and Germany.

The BSP’s RTGS is suited for low-volume, high-value transactions. It lowers settlement risk, besides giving an accurate picture of an institution's account at any point of time - an alternative to systems of settling transactions at the end of the day.