Filipino consumers and businesses lost an estimated P50 billion to foreign exchange markups on cross-border transactions in 2024, according to global payments firm Wise.
This is significantly higher than the P8.37 billion estimated a year earlier, which covered consumers alone. The losses were driven largely by forex markups embedded in conversion rates, which many customers may not immediately see when sending or receiving money across borders.
Wise Philippines country manager Areson Cuevas said consumers typically pay around three to five percent in fees and foreign exchange markups compared to Wise’s average cost of about 0.5 percent.
‘For 2024, the estimate is P50 billion for both personal and business customers,’ he said during a media briefing yesterday. ‘It’s a waste. That P50 billion should have been in people’s pockets to pay for their daily needs, but it just went to intermediaries.’
Cuevas said the difference could translate into substantial savings for consumers, particularly families dependent on remittances as well as small businesses dealing with overseas clients and suppliers.
He said Wise charges an average fee of about 0.5 percent for cross-border transfers, significantly lower than the three to five percent that the company estimates consumers typically pay through other providers.
The Philippines remains one of the world’s biggest recipients of remittances, providing a sizable market for companies seeking to lower the cost of moving money internationally.
Latest central bank data showed personal remittances grew by 2.6 percent to $15.74 billion from January to May compared to last year’s $15.34 billion.
Wise said a key challenge is that many consumers remain unaware of how forex markups affect the amount they ultimately receive.
He said Wise has been engaging regulators, industry participants and freelancers to improve transparency and encourage consumers to compare the actual cost of different cross-border payment services.
Cuevas said the Philippines remains an important market for Wise given the large Filipino population living overseas as well as the growing number of freelancers, travelers and businesses with international payment requirements.
Beyond traditional remittance recipients, Wise is also seeing changing behavior among Filipino customers as the peso weakens against the dollar.
Cuevas said more Filipinos are keeping funds in foreign currencies and delaying conversion into pesos until they need the money or see a more favorable exchange rate.
‘Unfortunately, the peso has been depreciating,’ Cuevas said. ‘So we see more Filipinos keeping their money in foreign currency and converting it to pesos when they actually need it, rather than when they receive it.’
Wise allows users to hold and transact in more than 40 currencies through its multi-currency account. Filipino freelancers, for instance, may receive payments in foreign currencies and choose when to convert these into pesos instead of automatically receiving the funds in local currency.
As it seeks to broaden its presence in the country, Wise is also in talks with more Philippine banks for potential partnerships involving its cross-border payments infrastructure.
The company already has a partnership with GoTyme Bank that allows customers to send money internationally using Wise’s infrastructure.
‘We are talking with other banks,’ Cuevas said, adding that Wise wants its payment network to extend beyond its own customer base by working with local financial institutions.
Cuevas also said the company is open to working with non-bank players, although it currently has no such partnership in the Philippines.