MANILA, Philippines - Major rural banks are looking at coursing their financial transactions through the central bank’s Philippine Payments and Settlements System (PhilPaSS) to expand their services to beneficiaries of overseas Filipino workers (OFW) remittances particularly in the countryside.
Ian Pama, president of the 600-strong Rural Bankers Association of the Philippines (RBAP), said that major players in the rural banking industry are set to course their financial transaction through the PhilPaSS over the next six to 12 months as part of the many innovations that would be undertaken by the association.
“RBAP has a strategic role to play if and when the organization decides to use the system. Should RBAP members decide to use the system, then we can offer cheaper, if not the cheapest transaction fees without incurring any losses,” Pama said.
So far, he pointed out that none of the country’s more than 600 rural banks have made use of the electronic payments and settlement system of the BSP. PhilPaSS is an online and real-time gross settlement payment system administered by the central bank to facilitate payment transactions between banks.
He added that about 12 universal, commercial, and thrift banks are coursing their OFW remittances through the PhilPaSS and are reaping the cost advantages.
“While remittance centers are a dime a dozen, there is still a way for us rural bankers to enter the industry by offering a faster yet affordable service to our clients in the countryside who are also beneficiaries of many OFWs. This is where the PhiPass remitting system comes in,” Pama said.
The PhilPaSS-Remit system is part of the advocacy of the BSP to help Filipinos abroad and their beneficiaries by providing a safer, faster, and cheaper means of remittance. The project is one of the initiatives undertaken by the BSP in coordination with the Association of Bank Remittance Officers Inc. (ABROI) through a memorandum of agreement (MOA) in December of 2009 but was implemented in the second quarter of last year.
The BSP has encouraged banks and financial institutions to course OFW remittances through the central bank’s electronic payment and settlement system so that beneficiaries of Filipinos working abroad could enjoy lower fees.
The BSP said the settlement of OFW remittances through the PhilPaSS Remit System would result in savings of between P100 and P500 per transaction as current system charges between P150 and P550 per transaction. OFW families are expected to save at least P92 million to as high as P922 million due to the faster and cheaper delivery of remittances to the beneficiaries at a lower rate of P50 per transaction instead of the current range of between P100 and P550 per transaction.
OFW remittances grew by 8.2 percent to a record level $18.76 billion last year from $17.35 billion in 2009 due to the continued demand for skilled Filipino workers abroad as well as the expansion of remittance centers abroad giving OFWs more options to send money to their loved ones in the Philippines.
Last April, BSP lowered its OFW remittance growth forecast to seven percent or $20.1 billion instead of the original target of eight percent or $20.2 billion this year due to the tensions in the Middle East and North African (MENA) states and the disasters in Japan. Next year, it expects a slower growth of five percent or $21.2 billion.