Financial LiteracyFinancial FreedomPersonal Finance

PESONet and InstaPay: PH Bank-to-Bank Transfers Made Easy(6-min read)

pesonet vs instapay

It is said that the late Gov. Nesting Espenilla, former BSP chief, was tech-savvy, and during his short stint, he championed digitization and mobile banking. The end goal was to reach the unbanked, those who don’t have bank accounts or access to basic financial services, with the use of technology and internet. Through these, hopefully, more Pinoys will have easier access to cash and finances, making them more financially literate, thereby improving their lives, the flow of money in the economy, and the country as a whole.

Governor Espenilla is a humble public servant, progressive central banker, and relentless champion of financial inclusion.

– Orlando Vea, Chairman, Philippine eMoney Association

Among the progressive changes implemented recently, that will be easily felt by the working class, is the faster check clearing which used to last 3 days, but now can be cleared the next banking day (if you deposit it before cut-off of previous day). The intent was to make the movement of money faster, easier. We have also seen the influx of money transfer and remittance businesses all over the country, which is another way of sending and making money available to our brothers and sisters in the country-side, especially in our country that’s an archipelago, to places where there are no major banks. And of course to facilitate remittances from our OFWs.

The country and our financial system are taking steps toward the right direction, and one big milestone is the launch of PESONet and InstaPay. Well, the premise here is that you have a bank account, and you have access to their online banking system or via mobile apps. Next time I’ll write about mobile wallets that don’t need bank accounts, such as GCash and PayMaya. For now, let’s talk about bank-to-bank transfers.

At last, the days of lining up in many bank branches just to deposit money will be minimized.

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Bank to Bank Transfer Routine

Let me know if you can relate to my routine every payroll day:

  • My twice-a-month payroll gets credited in the Bank Blue and White (with very few branches and ATMs)
  • I have easy investment plans in Bank of Gold and Apple Green Magenta Bank so I have to deposit money in those accounts before they get debited for my UITF investments.
  • I pay my credit cards using Bank of Gold or sometimes via Big Red White Gold Bank. My monthly insurance premium ADA is also with Big Red White Gold Bank.
  • I have a mortgaged condo to pay with Blue and Green Bank, while wifey has her own mortgage to pay with the Smaller Red White Bank.

Above routine is my semi-monthly exercise. And yes, I am not an unbanked person. Usually I deposit a check to transfer from my payroll to my personal account, or withdraw cash via ATM then direct over the counter branch deposit, or via mobile transfer/ online banking using the apps of above banks. But with PESONet and InstaPay, I will have less walking and bank branch transactions to do. Yipee! 🙂

Hopefully you too. If you’re into business and have suppliers to pay, then maybe you also do a lot of bank transactions. If you have relatives you need to transfer money to, this can be helpful. Of course, before you are able to transfer money online or via apps, you will have to fund the account first. At some point, you will really have to deposit money to your account. Hopefully, these initiatives will minimize our need to go to bank branches. At least we just need to go to one bank, then farm out the money to multiple banks via electronic transfer. For those who have payroll accounts where the company is the one depositing money, then no need to go to a branch at all. Upon payroll crediting, Juan can already transfer and farm out those funds to his banks of choice.

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PESONet

Stands for Philippine EFT System and Operations Network, where EFT means electronic fund transfer. Simply put, through the mobile / online banking apps of your preferred bank, you can send money to other banks and funds will be sent to the receiving account within the same day (if you meet the cut-off). So this is not real-time crediting, but by batch run end of day the recipient should already get the money. There may be fees involved with the sending of money, but the advantage here is there no limit as to how much one can send. Likewise, transactions are only allowed during business days.

BSP views PESONet as an opportunity for smaller industry players such as rural banks and thrift banks to have greater participation in the retail payment system. This should also make sending money to relatives easier, assuming they have rural bank accounts. This can also enable employers to credit payroll and salaries to existing bank accounts of their employees, without needing to create a separate payroll account.

Click here for BSP FAQs on PESONet.

InstaPay

InstaPay also allows bank to bank transfer, but this one is instantaneous, close to real time. Again, Juan will just need to access his bank’s online or mobile app to facilitate the transfer. Limit of sending is P50,000 per transaction, but you can use it even during weekends and holidays.

Here’s a quick summary for both and compared to other means of money transfer:


Click here for the BSP FAQs on InstaPay. You choose which one will be more useful for your needs. Are you in a hurry and need instant money transfer? Or is your recipient willing to wait?

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There’s No Free Lunch

Of course Juan will have to pay for convenience. In my case, I incur ATM withdrawal fees since the ATM of my payroll account is a rare Pokemon, so I use the more common ATMs to withdraw. I also use up / waste precious time queueing in various bank branches, and since I do this during payroll days (10, 15, 25 or 30), so do other people. As such there are so many people in the branches at these dates. I also incur P150 to P250 in replenishing my checkbooks once I run out. So for me, the transaction fees for PESONet and InstaPay are just similar to what I incur right now, less the hassle and effort so I’m ok with it.

Likewise, Juan must realize that at the end of the day, the banks are businesses. The bigger banks will surely feel more people coming into their branches, just to deposit, then in an instant, transfer the amount to a much smaller bank with minimal to none branch presence in highly commercial and populated areas. So in a sense this is really an advantage for those with less accessible branches, and the bigger more accessible banks will definitely use their size to their advantage. Plus the upkeep of security, monitoring, manpower involved to process these transactions, there are costs involved with it, and definitely they will pass on the costs to the customers.

Click here for the table of fees charged by your preferred banks: PESONet and InstaPay Fees.

Finally, click link below for BSPs infomercial.

Screenshot of Video from BSP’s Facebook Account

Click here to watch BSP’s video.

This should be a good direction for both the banked and unbanked. Excited for the many revolutionary changes happening in the banking industry and our monetary system. Hopefully we achieve much improved financial inclusion in the years to come.

Financial literacy is one of building blocks toward financial freedom. More than investments, we can teach you the basics first: how to have a wealthy financial mindset and how to build a solid financial base, before you even begin investing your money. Download #10Steps to a Richer Life to know more.

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