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Last week, the World Bank released its data on gross national income (GNI) per capita in 2025. Among the highlights of the numbers is that the Philippines – along with Vietnam, Jordan, Micronesia and Sri Lanka – has moved up from lower-middle to upper-middle income country (UMIC). Good news.
The range for UMIC is annual per capita income of $4,636 to $14,375. In 2024, the Philippines has $4,470 or short by $166. In 2025, we have $4,850 which qualified us to be considered as UMIC.
In succeeding statements, DEPDev Secretary Arsenio Balisacan said: “This confirms the resilience of the Philippine economy… Despite global and domestic shocks, we have strengthened fundamentals, and remained on track with our development agenda.”
Executive Secretary Ralph Recto noted that “Hindi lang ito titulo. Ibig sabihin nito, mas lumalago ang ekonomiya natin. Mas dumarami ang trabahong nalilikha, mas lumalaki ang kita ng ating mga kababayan, at mas maraming investors ang nagtitiwala sa Pilipinas…. Kaya hindi tayo titigil hangga’t mas maraming Pilipino ang nakakaahon sa kahirapan at mas gumagaan ang kanilang pamumuhay.”
Both officials are correct in their economic optimism. And those who dismissed our improvement to a UMIC status as “meaningless upgrade” or just “reclassified” are wrong in their economic pessimism.
Until about a decade or two ago, the poor were riding bicycles, carabaos and second-hand motorcycles. Now the poor ride brand-new motorcycles, e-bikes and second-hand cars. Before, the poor were communicating via slow mail, letter-bearing pigeons, now they communicate via Messenger, Viber and other social media as almost everyone has a cellphone.
The Philippines’ GNI per capita has been consistently rising from $1,350 in 2005, $3,280 in 2015 and $4,850 in 2025. Malaysia is stuck in a “middle income trap” with per capita income of $5,240, $10,350 and $12,380 over the same period. China will likely become a high-income country in 2026, its per capita income has been jumping like kangaroo at $1,790, $8,040 and $14,230 over the same period.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) has issued Circular 1238 Series of 2026 or the Amendments to the National Retail Payment System Framework and the Regulatory Framework for Merchant Payment Acceptance Activities issued on June 17 and became effective on July 4.
On person to person (P2P) electronic fund transfers (EFT), Circular 1238 has amended Section 2, National Retail Payment System Framework to read as: “(d) For P2P EFTs, recipients shall receive the full amount as credit to their accounts, free of any charges or deductions.”
Zero charge for fund transfers, free service with unfree costs, this is price control and monetary coercion. The related recent reports in The STAR written by Keisha Ta-asan here, “BSP to tighten oversight of banks, e-money issuers” (July 3), “More banks to cut, waive online transfer fees – BSP” (July 5), “Banks, e-wallets told to explain high transfer fees” (July 8).
I say that the new BSP order is price control and monetary coercion for five reasons.
One, providing EFT service is not free, it has costs: technology infrastructure and innovations that expand access to more users, manage and control fraud, maintain regulatory compliance with BSP, SEC, BIR and other regulators. Telling e-wallets and electronic money institutions (EMIs) that they should not recover their costs by providing free service is not fair.
I see many non-rich Filipinos using GCash, Maya, GrabPay, ShopeePay, other e-wallets and they are happy. Many do not seem to have bank accounts but have e-wallet accounts, can send and receive money and payment for services. I myself load up my tollroad cards or pay water bills via e-wallet, useful and the charge is low compared to the convenience that I enjoy.
Two, banks and e-wallet companies or EMIs are not the same, cannot be treated as the same. Banks earn most of their revenues from lending and deposits, not service fees. E-wallets and EMIs earn mostly from service fees and commissions, not lending and deposits.
The numbers that I researched, banks earning from fees and non-fees (deposits, loans, investment in bonds, etc.) are 13-87 ratio while EMIs’ are 90-10 ratio, they are opposite in making money. BSP treats both banks and EMIs as the same and expect the same response to its one-size fits-all order, not good.
Three, the Philippines is not the same as countries cited as examples of zero-fee transfers. Thailand’s PromptPay is not zero-fee all the time, fees still apply above certain thresholds. India’s large wallet players were losers and became profitable only recently, some remain unprofitable, and digital payments penetration is only around 40 percent, implying that zero-charge did not automatically create universal adoption. Other countries often cited in zero-fee transfers, their banking penetration is high, in the 80–90 percent+ range.
Four, more players and service providers, the better. The most expensive electricity is no electricity, blackout. The most expensive EFT is non-available EFT entities, or only banks will do the function, no competition from EMIs.
Five, offline cash-in and cash-out serve the poor more than the non-poor. Around 43 percent of users who cash in are doing it through offline channels which are over-indexed in Visayas, Mindanao, lower-income segments who are underserved, underbanked, or dependent on physical cash-in and cash-out channels.
BSP should focus on price stability function, encourage more competition among finance institutions to keep borrowing and lending rates low, keep service fees fair and market-based, avoid one-size fits-all orders and circulars.
Thus, BSP should revise Circular 1238 and not impose zero charge for P2P EFTs. If some EMIs will charge P5 or zero per transaction, so be it as part of their marketing but it should not be forced upon them.
