Republic of the Philippines

Tarlac State University

College of Business and Accountancy
San Vicente St., Romulo Blvd., Tarlac City
S.Y 2016-2017

Impacts of Processing Fees in the

Growth and Development of
Commercial Bank
(Research Study)

Prepared by:
Abila, Charinne M.
Cunanan, Erika
Mariano, Joy Ann
Lumna, Trilin
Salcedo, Javielyn
-Group 9
FM 3A

Submitted to:
Prof. Rowena Ramos
Table of Contents
I. Introduction..3
II. Statement of the Problem....5
III. Methodology.....6
IV. Results and Discussion.....7
V. Conclusion and Recommendation.17
VI. Literature Cited...18
VII. Appendices19
VIII. Documentary21
IX. Researchers Vitae...22

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I. Introduction

The collection of processing fees is one of the sources of fund for a

bank. When you open a bank account, there are number of fees that you

need to pay for getting an account serviced. From processing fees to

service charges to loan fees. When standalone, these are extremely

nominal account but when accumulated, this becomes a significantly large

sum. The bank need this huge amount to pay wages and salaries of the

huge employee base that they normally have. The bank needs to maintain

this kind of huge employee base to ensure that customers get a complete

range of personalized service. Many customers who might be shying away

from putting their huge deposits in banks due to their inexperience in

dealing with banking processes can be attracted in this manner. This kind

of personalized service woos them to bring their savings to the bank and

take advantage of the lucrative interest rate benefits.

Think of a shopping mall, if you do not have the required number of

customers coming in everyday, buying stuff, eating food at the food

courts, availing the services offered by the many stalls that are set up

there, what would happen? The shopping mall would eventually close

down, and the businessmen would have to wrap up their business very

soon. Now, the same principle applies to a bank. The customer base is any

banks backbone. Without the target number of customer base, proper

functioning of a bank is absolutely impossible. That is why it becomes

very important for a bank to nurture its customer base to make money.
 When a customer walks into a bank, it is not just one service they look at.

Normally there are advertisements of multiple range of service that the

bank might be offering and many times when a customer walks in he or

she might be wooed into availing another service about which they might

not have given any thought till that time. Thus, the amount of money that a

bank makes is directly proportional to the total amount of customers it is

able to attract and the range of service it is able to attract.

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II. Statement of the Problem

The study is intended to determine the effects of processing

fees in commercial banks, specifically, it seeks to answer the

following:

1. What are the nature of processing fees charged by the commercial

banks?

2. How do processing fees contribute to the growth and development

of the bank as to:

2.1 level of revenues

2.2 level of satisfaction of clients

2.3 continuity in operation

 III. Methodology

The type of research that was used in this study is qualitative

and quantitative research. The researchers aim to gather an in depth

understanding of processing fees in a bank and the reasons why they

charge it. The researchers also examine the bank through observations

of its growth and development. Along with the questionnaires given

out to respondents engaging in a bank for statistical representation of

the findings in the study; interviews with few bank officers who are

knowledgeable about the operations of the bank is also conducted. The

study is limited only for commercial banks.

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IV. Results and Discussion

Findings: Questionnaire for customers

Questions Yes No
1. Do you get appropriate information
17 13
about processing fees from the bank?
2. Do you fully understand the
implication of processing fees in a 5 25
commercial bank?
3. Do you consider the charges or fees
levied by the bank reasonable and fair 23 7
for providing their services?
4. Do you think processing fees are
27 3
necessary in a bank?
5. Are you aware that you pay processing
20 10
fees?
6. Do you think the bank follows fair and
simplified pricing for processing fees 17 13
and avoid high-rate processing fees?
7. Do you think that the amount of
processing fees you pay is one of the
16 14
factors that improves the services of
the bank?
8. Does the improved services satisfy
13 17
your expectations?
9. With the improved services offered by
the bank, do you think it is just and
21 9
okay for you to pay for the certain
amount of processing fees?
10. If for some reason, you are unsatisfied
with the improved services, do you
want to lessen the amount of 17 13
processing fees being charged by the
bank?

Note: There are total of 30 respondents in every question.

 1. Do you get appropriate information about
processing fees from the bank?
YES NO

43%

57%

2. Do you fully understand the implication of

processing fees in a commercial bank?
YES NO

5%

95%

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3. Do you consider the charges of fees levied by the
bank reasonable and fair for providing their services?
YES NO

23%

77%

4. Do you think processing fees are necessary in a

bank?
YES NO

10%

90%
 5. Are you aware that you pay processing fees?
YES NO

33%

67%

6. Do you think the bank follows fair and simplified

pricing for processing fees and avoid high-rate
processing fees?
YES NO

43%

57%

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7. Do you think that the amount of processing fees you
pay is one of the factors that improves the services of
the bank?
YES NO

47%
53%

8. Does the improve services satisfy your expectation?

YES NO

43%

57%
 9. With the improved services offered by the bank, do
you think it is just and okay for you to pay for the
certain amount of processing fees?
YES NO

30%

70%

10. If for some reason, you are unsatisfied with the

improved services, do you want to lessen the amount of
processing fee being charged by the bank?
YES NO

43%

57%

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Findings: Interview for Bank Employees

Processing fees is collected to recover only a part of expenditure

incurred for the process. Cost of establishment, manpower, time spent on a

proposal etc. Please remember that profit is made for survival and continuing

in sustaining the business. These charges are levied because it consumes

significant man hours of bank. Banks pass on these charges to customer.

Banks charge processing fees because there are a lot of cost incurred by banks

while processing your service requests.

Some other reasons why a bank charges processing funds:

- For physical infrastructure: Point of sale terminals, ATMs,

Bank Branches

- Human Infrastructure: Staff salaries who work on processing

and servicing your requests

- Technological infrastructure- switch fees for routing your

transaction, cost of creation of cards, payment gateways

- Operational Structure: paper work

Bank needs to extract the cost of above costs thats why they

charge processing fees. The processing charge of providing you

services like deposit safety or lending or ease of transactions is your

processing fees.
 The collection of processing funds in a bank is one of the steady

sources of revenue for banks. Processing fee is usually paid for at the time a

person applies for a loan, credit card or hires someone to perform a service.

Even if the person ends up not being approved for the loan or credit card, in

most cases, the fee is non-refundable. It is basically for all the documentation

work involved while getting your loan sanctioned.

The steady fund inflow is one of the most fundamental triggers to

maintain service record and attract additional customers.

Here are some of the processing fees of Philippine National Bank:

FEE DESCRIPTION AMOUNT

Card Incurred when card replacement is Php 400

Replacement requested due to: a. Lost or stolen
Fee card; b. Spoilage (defective
magstripe, plastic peeled off,
unreadable CVC2, cracked card,
wrong name embossed); or c.
Change in Name (from single to
married and vice versa).
Cash Incurred when a cardholder makes 5% of CA amount
Advance Fee a cash advance (CA) transaction for Peso or 2% for
on his/her credit card. Dollar +
transaction fee of
Php 100 (Peso) or
US $3 (Dollar)
Certification Incurred once a cardholder Php 200 / Php 300
Fee requests for a particular certificate: / Php 300
Full settlement of account / Good
Credit Standing / Card
Replacement Issuance

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Credit Card Used when a US Dollar billing is Depends on
Rate Fee paid in Peso. MasterCard, Visa
or UnionPay
conversion rate of
the day.
Finance Incurred when a cardholder pays 3.25%
Charge only a portion of the total amount
due but not less than the minimum
amount due.
Foreign Incurred when a cardholder makes 1.50% of
Currency transactions outside the MasterCard's and
Transactions Philippines (excluding US Dollar). 2% of
Service Fee Visa/UnionPay's
foreign exchange
rate at the time
transaction is
posted.
Installment Incurred when a cardholder 5% of the
Pre- cancels an installment transaction remaining unpaid
termination prior to the posting of the last total installment
Service Fee amortization amount or P500,
whichever is
higher.
Late Incurred for non-payment, Php 300 or US $10
Payment Fee payment after due date or payment
below the minimum amount due.
Refund Fee Incurred when a refund for over Php 300 or US $10
payment is requested by a - if credit to a
cardholder. PNB/Allied Bank
account; P500 - for
deposits to other
bank Peso CASA
account; for
deposits to other
bank US CASA
accounts - depends
on amount
 Returned Incurred when a check payment Php 1,000 for Peso
Check Fee was dishonored or returned by the account or US $10
bank for reasons such as account for Dollar account
closed, Drawn Against Insufficient
Fund (DAIF), Drawn Against
Uncollected Deposits (DAUD),
etc.
Sales Slip Incurred once a cardholder Php 400 or US $15
Retrieval Fee requests for retrieval of a (per Sales Slip)
particular slaes slip to verify a
transaction.
Statement of Incurred when a cardholder Php 50 per
Account requests for a fax or mail copy of statement
(SOA) his/her old statement of account
Retrieval Fee (beyond 3 months from current
SOA).

*Note: All fees except for the Refund Fee and Credit Card Rate Fee shall be charged
to the cardholders Statement of Account (SOA). The Refund Fee will be deducted
from the amount to be refunded. The Credit Card Rate Fee will be charged at the
bank level during the sale of USD Notes. Peso amounts are for Peso accounts and
Dollar amounts are for Dollar accounts.

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V. Conclusion and Recommendation
Literature Cited

file:///D:/Files/Downloads/PNB-Credit-Cards-Fees-and-Charges.pdf

https://www.quora.com/Why-do-banks-charge-processing-fees

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.556.8415&rep=

rep1&type=pdf

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Appendices

Republic of the Philippines

Tarlac State University
College of Business and Accountancy
San Vicente St., Romulo Blvd., Tarlac City

Questionnaire
For Customers

Objective: Data are collected for research work and other than this has no other
purpose. The information collected from respondents would be kept confidential.

Name: ______________________________________________________________

Note: Check ( ) the option of your choice

Questions Yes No
1. Do you get appropriate information about processing
fees from the bank?
2. Do you fully understand the implication of processing
fees in a commercial bank?
3. Do you consider the charges or fees levied by the bank
reasonable and fair for providing their services?
4. Do you think processing fees are necessary in a bank?
5. Are you aware that you pay processing fees?
6. Do you think the bank follows fair and simplified
pricing for processing fees and avoid high-rate
processing fees?
7. Do you think that the amount of processing fees you
pay is one of the factors that improves the services of
the bank?
8. Does the improved services satisfy your expectations?
9. With the improved services offered by the bank, do you
think it is just and okay for you to pay for the certain
amount of processing fees?
10. If for some reason, you are unsatisfied with the
improved services, do you want to lessen the amount of
processing fees being charged by the bank?
 Republic of the Philippines
Tarlac State University
College of Business and Accountancy
San Vicente St., Romulo Blvd., Tarlac City

Interview Guide
For Bank Employees
Questions:
1. What are the nature of processing fees?
1.1 What is processing fees?
1.1.1 How much?
1.1.2 When to pay?
1.2 Why do banks charge processing fees? What are the reasons?
2. Do you really think that processing fees are for growth and development of
the bank?
3. What is the effect of processing fees as to level of revenues in a bank?
3.1 What is the percentage of processing fees in contributing revenue for the
bank?
4. What is the effect of processing fees in the continuity of the operation?

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Documentary
RESEARCHERS VITAE

Name: Charinne M. Abila

Nickname: Char
Age: 18
Birthday: September 26, 1998
Address: Matatalaib, Tarlac City
Religion: Roman Catholic
Contact no.: 09173426316
E-mail: acharinne@yahoo.com
Fathers name: Mr. Rodrigo V. Abila
Occupation: Farmer
Mothers name: Mrs. Cherryl M. Abila
Occupation: Nurse
Hobbies: Surfing the internet, listening to music
Course: Bachelor of Science and Business Administration, Major in Financial
Management
Desired Occupation: Bank Employee/ Financial Executive
Signature:

Name: Joy Ann P. Mariano

Nickname: Joy
Age: 18
Birthday: June 28, 1998
Address: Zone 4 Calingcuan, Tarlac City
Religion: Roman Catholic
Contact no.: 09174521247
E-mail: payangmariano@gmail.com
Fathers name: Mr. Joseph Mariano
Occupation: Employee
Mothers name: Mrs. Aurora Mariano
Occupation: Housewife
Hobbies: Reading, watching, biking
Course: Bachelor of Science and Business Administration, Major in Financial
Management
Desired Occupation: Chief Financial Officer
Signature:

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Name: Erika P. Cunanan
Nickname: Erika
Age: 18
Birthday: August 13, 1998
Address: Teresa Homes, Tibag Tarlac City
Religion: INC
Contact no.: 09277461676
E-mail: Erikacunanan@gmail.com
Fathers name: Mr. Edwin Cunanan
Occupation: Tricycle driver
Mothers name: Mrs. Gemma Cunanan
Occupation: Housewife
Hobbies: Watching Movies
Course: Bachelor of Science and Business Administration, Major in Financial
Management
Desired Occupation: Manager
Signature:

Name: Trilin A. Lumna

Nickname: Tri
Age: 18
Birthday: June 30, 1998
Address: Ramos St., Paninaan Tarlac City
Religion: Roman Catholic
Contact no: 09355867898
Email: trilumna@gmail.com
Father's name: Mr. Yolino A. Lumna
Occupation: Businessman
Mother's name: Mrs. Trinidad A. Lumna
Occupation: Teacher
Hobbies: Reading books and watching BTS
Course: Bachelor of Science and Business Administration, Major in Financial
Management
Desired occupation: Financial Executive
Signature:
Name: Javielyn C. Salcedo
Nickname: Jav
Age: 18
Birthday: July 20, 1998
Address: Panampunan, Tarlac City
Religion: Roman Catholic
Contact no.: 09562831438
E-mail: none
Fathers name: Mr. Jovert A. Salcedo
Occupation: Painter
Mothers name: Mrs. Jocelyn M. Cortez
Occupation: OFW
Hobbies: cooking and watching
Course: Bachelor of Science and Business Administration, Major in Financial
Management
Desired Occupation: Financial executive/ owner of my own business
Signature:

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