Fee waivers deepen digital engagement

From AB Capital's The Opening Bell: Three Moves

Event

InstaPay and PESONet transaction value rose 44.8% YoY to P19.16 trillion in the first seven months, while transaction volume surged 155% to 4.98 billion. We think volume growing much faster than value suggests lower-ticket, higher-frequency usage, consistent with fee waivers encouraging broader digital payment adoption.

View

This is a positive read-through for GCash/Mynt ahead of a potential initial public offering (IPO), in our view, because rising transaction frequency strengthens user engagement and the ecosystem available for monetization. It supports the platform growth narrative, although payments growth alone does not establish earnings upside without corresponding data on active users and monetization.

Catalyst

For banks, waived transfer fees create an immediate revenue trade-off, but higher digital activity can partly compensate through stronger account engagement, current account savings account (CASA) balances, merchant payments, and cross-selling of cards, loans, investments and insurance. The key sensitivity is whether incremental customer monetization exceeds the foregone transaction fee income.

Action

We view the Bangko Sentral ng Pilipinas (BSP) policy as strategically positive for digital financial platforms and manageable for larger banks with diversified fee businesses. BDO and BPI should be better placed to absorb lower transfer fees, while Mynt could benefit from stronger engagement metrics if transaction growth translates into broader financial services usage.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.