{
  "id": 4670495,
  "title": "The price of inclusion",
  "url": "https://urgent.news/2026/08/31/the-price-of-inclusion",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-31T16:00:00.000Z",
  "source": {
    "name": "Philippine Star Business",
    "slug": "philippine-star-business",
    "url": "https://www.philstar.com/business/2026/09/01/2553107/price-inclusion"
  },
  "original_language": "en",
  "account": "In 2017, I addressed an audience at the Microfinance Council of the Philippines Annual Conference, advocating for electronic payments as a catalyst for inclusive growth. Back then, \"digital\" was not yet omnipresent. We were still discussing mobile financial services, e-money, and basic building blocks of a cashless economy. Around the same time, I observed a technical working group under then-BSP Deputy Governor Nestor \"Nesting\" Espenilla Jr., which led to the creation of the Philippines PESONet and InstaPay – systems that, at the time, existed only on paper and in ambition. A decade later, the challenge of bringing Filipinos into the formal financial system has been largely resolved. However, a more profound and intriguing question has emerged: once the infrastructure is in place, how can we ensure Filipinos regularly and affordably utilize these digital payment systems, transforming them from occasional conveniences into habits?\n\nA research collaboration between RCBC and Innovations for Poverty Action (IPA) Philippines delved into this question. The initial findings, presented at a forum, warrant broader attention. Historical transaction data revealed a concerning pattern: while the average transaction size was increasing, transaction frequency was decreasing. Customers were consolidating their payments, moving from frequent, smaller transfers to fewer, larger ones. This phenomenon prompted a critical inquiry: are digital transaction fees merely charging for a service or are they fundamentally altering consumer behavior?\n\nTo address this, we conducted a rigorous study, randomly assigning different InstaPay fees while keeping all other variables constant. The results were unequivocal. When fees were reduced, transaction volumes spiked, often doubling or even tripling. Users of DiskarTech made roughly 100% more transactions, while Pulz users increased their activity by about 30%. Interestingly, the most significant effects were observed at very low and zero fees, and these lower prices also attracted customers who had previously been reluctant to use InstaPay. Most notably, there was little evidence of customers merely shifting their transactions between different payment channels. The additional volume represented new usage, not displaced usage. Lower fees reduced friction and, crucially, created real, incremental value.\n\nFrom these findings, three key lessons emerge for the entire industry. Firstly, access and affordability are distinct objectives. While an account, app, and QR code can bring a customer into the digital payment ecosystem, affordability determines whether they return. Our data indicated that lower fees significantly enhanced retention among DiskarTech users, a segment for which even the smallest friction matters the most. Secondly, the true cost of a fee is not just the fee itself; it is the behavior that fee generates. Pricing decisions determine not only whether a customer transacts but also how often they do so and whether new users are willing to engage with the system in the first place. Thus, pricing is as much an inclusion decision as it is a revenue decision. Importantly, this does not imply that every fee should be eliminated to zero; rather, lower fees measurably reduce friction and generate consumer value, making it the institution's responsibility to understand this trade-off rather than conjecture about it. Pricing is just one of several levers. Building trust, ensuring usability, securing merchant acceptance, and protecting consumers remain critical. Price alone will not bring the most hard-to-reach users onboard. Finally, good policy hinges on robust measurement. Our work with IPA explores how accurately surveys and self-reported data reflect actual customer behavior as opposed to their stated intentions. There is a substantial gap between what customers say and what they actually do. Policy decisions based on self-reported data could lead to designing systems based on perception rather than reality. Nevertheless, there is an aspect of this discussion that industry participants often overlook: the role of financial institutions themselves. Since its inception in 2017, only about five percent of rural banks have joined the InstaPay system. Achieving widespread digital payment adoption will require making these payment rails accessible to the institutions that serve the last mile, such as community and rural banks that often serve as the primary formal financial touchpoint for families. Every pricing decision made by a bank ultimately influences the consumer's decision-making process: should they transact now, wait to combine transfers, or deem digital payments too burdensome today? Across millions of Filipinos, these decisions collectively shape the overall digital payments ecosystem we are collectively constructing. The Bangko Sentral ng Pilipinas (BSP) sets the policy direction, while IPA generates the evidence. It is incumbent upon financial institutions to consistently test, learn, and adapt their pricing and product strategies as the digital payments landscape evolves. A decade ago, our primary goal was to construct the payment infrastructure. Today, our mission is to refine these systems to better serve every Filipino customer, recognizing that scaling inclusive digital payments is not merely about expanding the user base. It is about eliminating the friction that prevents them from engaging in transactions. In essence, digital payments will succeed not solely based on price but because of their trustworthiness, security, reliability, and speed. Ultimately, the goal is to make digital payments so seamless that cash becomes the exception, not the default, thereby removing the friction that keeps people from transacting. This is the true price of inclusion.",
  "summary": "Eleven years ago, I stood before an audience at the Microfinance Council of the Philippines Annual Conference and made the case for electronic payments as a driver of inclusive growth.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}