By Lawrence Agcaoili (The Philippine Star) Updated May 25, 2010 12:00 AM
MANILA, Philippines - Overseas Filipino workers (OFWs) and their beneficiaries are expected to enjoy lower remittance fees starting the third quarter of the year once the Philippine Payments and Settlements System (Philpass) Remit System becomes fully operational, the Bangko Sentral ng Pilipinas (BSP) announced yesterday.
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.
“This will reduce the cost of remitting money from the OFW remitter to the beneficiary. Under the existing system, beneficiaries pay from P150 to P550 as back-end processing fee. With the migration to the new system, the fee will be reduced to P50 for each remittance transaction as the BSP will be charging banks a minimal amount for the settlement of transactions,” the BSP explained.
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.
The central bank added that the need for courier services by commercial banks for the mode of fund transfer involving credit-to-other banks would be eliminated once the project becomes operational.
“The Philpass ensures safer, faster, and cheaper means of remittance transactions,” it added.
The Philpass Remit System involves the use of the BSP-Philpass as the local clearinghouse for the transfer of remittances from a local bank to another bank where the OFW beneficiary maintains an account.
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) last December.
The BSP said the full implementation of the project was originally scheduled in the first quarter of the year but only one bank has been able to migrate to the new system since the signing of the MOA.
“Only this bank therefore will be able to service the processing of incoming and outgoing remittances at P50 per transaction as back-end processing fee charged to the OFW beneficiary while the rest of the ABROI member banks might still charge the old rate,” the central bank added.
According to the BSP, other member banks would be coming on stream once they resolve the remaining issues on hardware and system connectivity.
Other ABROI members expect to complete their migration to the new system only by end-May or end-June while two banks have indicated that they could comply only by end-September this year.
Last year, remittances went up by 5.4 percent to a new record level of $17.348 billion from $16.426 billion and exceeded the revised four percent growth forecast set by the central bank.
The BSP recently upgraded its growth forecast for the amount of money sent home by overseas Filipinos to eight percent instead of six percent due to the strong demand for Filipino skilled workers.
This early OFW remittances grew seven percent to $4.339 billion in the first quarter of the year from $4.057 billion in the same period last year on the back of strong demand for professional and skilled Filipino workers as well as improving global employment opportunities.
The bulk or about 81 percent of the total remittances reported by local banks came from the US, Canada, Saudi Arabia, the United Kingdom, Japan, Singapose, Italy, and the United Arab Emirates from January to March.