OFWs to save up to P922 million from lower fees

MANILA, Philippines – Families of Filipinos working and living abroad are expected to save at least P92 million to as high as P922 million after the Bangko Sentral ng Pilipinas (BSP) and a group of universal as well as commercial banks inked an agreement reducing the fees on fund transfers.

BSP Governor Amando M. Tetangco Jr. told participants of the signing ceremonies yesterday that families of overseas Filipino workers (OFWs) would be able to save between P50 and P500 per transaction as the fee for bank-to-bank remittance transfer would be reduced to only P50 per transaction.

Tetangco said banks currently charge a back-end processing fee ranging from a low of P100 per transaction to as high as P550 per transaction.

Data from the BSP showed that remittance transaction average 66.04 million per year from 2006 to 2008. Of the total estimated volume of transactions, about 1.844 million transactions are “credit-to-other banks” in nature.

With savings amounting to P50 to P500 per transaction, this would result in savings of P92 million to P922 million per year.

“For our overseas workers, this represents additional money that can benefit their families and other beneficiaries,” he added.

Under the memorandum of agreement (MOA), Tetangco said universal and commercial banks that handle OFW remittances would use the central bank’s Philippine Payments and Settlements Systems (PhilPaSS) to send the remitted money to the beneficiaries’ accounts in other banks.

“As a payment system infrastructure, PhilPass primarily settles high value payments from accounts maintained by banks with the BSP, thereby eliminating settlement risks,” the BSP chief explained.

Covered by the agreement are members of the Association of Bank Remittance Officers Inc. (ABROI) including Allied Bank, Asia United Bank, Banco de Oro, BPI, China Bank, the Development Bank of the Philippines, Land Bank of the Philippines, Metrobank, Philippine National Bank, RCBC, and United Coconut Planters Bank.

According to him, PhilPass would serve as a local clearing facility for the settlement of remittances for credit to other banks emerging as safer, faster, and more efficient option for OFWs sending money home to their families.

This, he added, would also eliminate delays as well as incidents of theft and robbery involving some couriers used by banks to deposit remittance to beneficiary accounts.

The BSP expects to complete the systems integration of ABROI member banks with the central bank’s PhilPass within the year to pave the way for test runs in January next year.

The linkage between PhilPass and ABROI member banks would be fully operational by February or early March next year.

Instead of a zero growth, the BSP now expects OFW remittances expanding by four percent to a new record high of $17.1 billion this year from $16.4 billion last year.

Latest data showed that OFW remittances climbed by 4.2 percent to $12.789 billion in the first nine months of the year from $12.273 billion in the same period last year. Major sources of remittances were the US, Canada, Saudi Arabia, UK, Japan, Singapore, United Arab Emirates, Italy, and Germany.

The amount of money sent home by Filipinos abroad is expected to further expand by six percent by next year. –Lawrence Agcaoili (The Philippine Star)