The removal of OTPs are mainly due to security concerns while the elimination of transfer fees are to encourage wider adoption of digital financial services.
The Bangko Sentral ng Pilipinas (BSP) is exploring the possibility of the removal of one-time passwords (OTP) for digital banking transactions due to concerns over their effectiveness and security. BSP Deputy Governor Elmore O. Capule highlighted that OTPs are increasingly being exploited for fraudulent activities. Technological advancements have made them more vulnerable to abuse, diminishing their reliability as a security measure.
Elmore O. Capule
“At a certain point, a technology that was once effective may no longer be so,” Capule stated.
He stressed that as digital threats evolve, financial institutions must adapt and seek more robust, future-proof security measures.
The BSP is currently investigating alternative technologies to enhance digital banking security. Capule suggested that behavioural authentication and biometric verification could serve as more secure replacements for OTPs. However, he acknowledged that phasing out OTPs would take time and is not an immediate priority.
In addition to security improvements, the BSP continues to advocate for free or significantly reduced transfer fees for digital transactions. At present, fees for transfers via PESONet and InstaPay range from PHP 8 to PHP 25 per transaction.
BSP Deputy Governor Mamerto E. Tangonan revealed that some banks are hesitant to implement lower or zero transfer fees, citing concerns about their business models and operational readiness. While acknowledging these challenges, Tangonan emphasised that lowering fees would encourage greater adoption of digital banking services, ultimately benefiting both consumers and financial institutions.
Mamerto E. Tangonan
“The objective is clear—it should either be very low or entirely free. The most successful instant payment systems have minimal transaction costs,” he added.
There is currently no definitive timeline for when banks will fully support the BSP’s initiative, but discussions are ongoing to reach a balanced solution.
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