By Lee C. Chipongian
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno assured the public that the lifting of the six-year ban on ATM fee increase does not mean an automatic adjustment and that banks would have to first submit proposals to the central bank.
“The moratorium on fee adjustment was just finished (but this does not imply) an automatic adjustment (in fees),” Diokno told reporters on the sidelines of the Memorandum of Agreement signing of the BSP, BDO Foundation and the Armed Forces of the Philippines in Camp Aguinaldo, Quezon City. The MOA was for a financial education program for uniformed personnel.
Diokno said banks do not have to charge P10 to P15 per ATM transaction if they choose not to, and in fact since the moratorium was lifted this year, no bank has yet to make a proposal to adjust fees.
“Depende sa bangko kung gusto nya mag charge or hindi. Hindi pa natin alam ang mangyayari. Wala pa naman nag-apply for adjustment (It will depend on the bank if it will charge a fee or not. We don’t know what will happen and there are no applications for adjustment),” he said.
Diokno also said: “Pag nag-propose na sila ng adjustment, they will have to go to the BSP at pag hindi namin gusto (we’ll) just tell them to change the modality.”
The BSP chief said he prefers the P10 to P15 fee per ATM transaction if making a withdrawal using an ATM that is not the client’s bank. “That is the likely arrangement… ipagpatuloy na lang (Just continue with existing fees),” he said. He also noted that not all interbank transactions are slapped with a fee, some are free of charge.
In 2013, before the moratorium was imposed, the country’s top three banks BDO Unibank Inc., Metropolitan Bank & Trust Co. and Bank of the Philippine Islands have all indicated their intention to raise ATM fees.
BDO President and CEO, Nestor V. Tan, is concerned that the circular approved by the BSP recently, which changed the manner of ATM charging from issuer-based to acquirer-based, may lead to higher fees.
“We are in discussion to see if we can revisit the way ATM fees are charged because the current setup is acquirer-based (based on the latest circular approved last April and announced in July in a memo) meaning the operator of the ATM will have to charge for usage of the ATM,” explained Tan.
“The difficulty with that setup is that the ATM operator will have to recover their costs (but) they don’t know who, other than their own clients, is using the ATM. In the old model where it’s an issuer-based pricing, the issuer or the one that issues the ATM card, knows the client. All banks are either issuer or acquirer, we’re on both sides,” he said.
“So, if we issue an ATM to a client, we can pick up the cost of the ATM, and then we will pay the other bank/s for usage of their ATM. Under the current setup, the cardholder will be charged by the acquirer (of the ATM), and that is the problem, because the acquirer cannot subsidize a non-client, they have to recover their costs.”
In a statement issued Tuesday, the BSP said that “its policy on ATM fees is guided by best industry practices and that it is driven with the broader welfare of consumers in mind.”
Based on BSP Memorandum No. M-2019-020, issued last month, banks will only have to inform the BSP about their proposed ATM fees based on the costs incurred from these ATM services.
The memo said in setting fees, an acquirer-based charging model will be adopted which means the imposition of fees “arising from agreements among BSP-surpervised financial institutions to fix the fee or have a fix share in fees shall not be allowed.”
The current practice in setting ATM fees is by issuer-based charging method. Under this method, an ATM fee is set and charged by the issuing bank and the amount charged to the cardholder remains the same regardless of who the ATM acquiring bank is.
The BSP’s rationale for adopting an acquirer-based charging method was that these acquirers have a significant role in the setting of fees, which is “justifiable considering that off-us transaction costs are substantially incurred by them, such as deployment and maintenance of terminals, cash servicing, ATM monitoring, among others.