The International Monetary Fund (IMF) has warned that the Philippines’ fragmented digital payments infrastructure is driving up retail transaction costs for consumers, making them higher than those of its regional neighbors.
In a technical report released Friday, the Washington-based lender explained that mismatched systems and standards create inefficiencies that hinder smooth fund transfers.
These infrastructure gaps increase operational costs for financial intermediaries, who then pass those expenses on to everyday users.
A major bottleneck involves transactions moving between the country’s two main automated clearing houses, PESONet and InstaPay. Because transfers between them require coordination between separate operators—BancNet, Inc. and the Philippine Clearing House Corporation (PCHC)—additional cross-settlement fees are generated, inflating the final cost.
The multilateral lender emphasized the disparity between local fees and those in neighboring countries.
“For end users, retail transaction fees in the Philippines are higher on average compared with its regional peers,” the IMF stated.
While many Southeast Asian nations offer free or near-free small-value peer-to-peer transfers, Filipino consumers usually pay between ₱10 and ₱25 per transaction. Corporate clients face even steeper charges, reaching up to ₱500. By comparison, Singapore’s PayNow system offers free transfers, whereas local InstaPay fees range from ₱9 to ₱30.
The report follows an IMF technical assistance mission in late 2024 that assisted the Bangko Sentral ng Pilipinas (BSP) in exploring a wholesale central bank digital currency (wCBDC)—a form of digital money restricted to financial institutions and large-scale market players.
The mission identified two priority areas for a potential wCBDC: settling tokenized government bonds and upgrading cross-border payment systems. Local regulators and financial institutions noted that inefficient cross-border transactions remain their most urgent challenge.
To guide the central bank, the IMF and the BSP designed a preliminary roadmap based on a “5P methodology”: preparation, proof-of-concept, prototyping, piloting, and full production. However, the IMF stressed that technology alone is insufficient, urging the government to establish a solid legal framework and proper incentives before any official rollout.
In a direct move to address these infrastructural gaps, the Securities and Exchange Commission (SEC) and the BSP recently approved the merger of BancNet and PCHC.
Operating since June 1, the unified entity is now known as the Payments Network of the Philippines Inc. (PNPI), with BancNet as the surviving organization.