FILIPINOS abroad and their families will be able to get some reprieve from high transaction costs of remittances as the Bangko Sentral ng Pilipinas (BSP) is keen on bringing this down to only 1 percent.
This is what BSP Governor Eli M. Remolona Jr. revealed at the “Philippine Economic Briefing” in San Francisco, United States of America, on Wednesday night.
Bringing down remittance costs is consistent with the country’s commitment to the Sustainable Development Goals (SDGs). Under the targets of the global goal, remittance costs should be cut to below 3 percent by 2030.
“It costs about 5 percent now to send money to the Philippines when it comes to retail, retail payments. We want to bring it down to 3 percent and eventually bring it down to 1 percent. So that’s the plan,” Remolona said.
Remolona said the reduction in remittance fees will be made possible through the “Nexus Payment System” or “NPS,” a digital and interoperable platform.
The NPS platform is being developed by the BSP along with its partners in the Association of Southeast Asian Nations (Asean). Eventually, the platform will not only be available in the region but also worldwide.
“This system is designed to be interoperable across banks around the world. We hope to go global and in the process reduce the fees for say remittances,”
Earlier, Asian Development Bank (ADB) experts said reducing the cost of remittances is crucial, especially in trying times such as pandemics, as these transfers represent lifelines for millions of families.
ADB experts led by Economic Research and Regional Cooperation Department Senior Statistician Stefan Schipper said there is still a long way to go to attain SDG 10 on reducing transaction costs to 3 percent.
Currently, remittance costs still represent around 5 percent of remittances sent by migrants and migrant workers all over the world. The ADB said informal remittance transfers were also particularly expensive while regulatory environments are too restrictive.
During the pandemic, altruism played a key role in remittance flows. Citing results of a survey by global payments company World Remit Belgium S.A. in mid-2020, the experts said 84 percent of over 3,000 overseas Filipinos sent home the same amount of money or more during the pandemic.
These overseas Filipino workers (OFWs) were hosted in countries such as the United Kingdom, the United States, Canada, and Australia. Remittances to the Philippines increased to 9.66 percent of gross domestic product (GDP) in 2020 from 9.33 percent of GDP in 2019.
Another factor that helped increase remittances during the pandemic was the greater availability of social and financial assistance to migrant workers in developed countries.
Last month, WorldRemit said about one billion people worldwide, or one in every eight persons, depend on remittances. The company’s 2023 Global Cost of Living Index study assessed how the cost of living crisis is affecting financial decisions, including those of remittance senders who regularly send money to their loved ones.