PARTNERSHIPS TO REACH ALL FILIPINOS

BSP readies, gets set, and goes for an efficient and reliable payment system

INDIVIDUALS CAN now avoid falling in queues to transfer funds from their banks and nonbank electronic money issuers; businesses can already pay and collect without going through the hassles of issuing and receiving checks or cash; and the government entities soon can receive fees or disburse funds in an instant.

These are the evident benefits of the National Retail Payment System (NRPS), the BSP’s flagship program for digital finance. This initiative is meant to transform the Philippine retail payments landscape into an ecosystem where individuals, businesses, and even government entities can enjoy the efficiency and reliability of payment systems.

Prior to the launch of the NRPS, most financial consumers had to go through the cumbersome manual means of transferring funds from a bank to another bank for payment or other purposes. As only few banks offered interbank electronic funds transfer service, most of the bank clients sadly resorted to physically moving cash, issuing checks, or opening a bank account with all of the banks preferred by their payment counterparties. Indeed, financial consumers were helpless with no choice but to bear the risk of handling cash or checks and endure the troubles of making manual payments.

Such a payment landscape has not escaped from the BSP’s keen eyes for areas that call for regulatory reforms. The BSP recognizes that from a broad perspective, such a condition translates into a drag on the economy. If available funds slowly change hands due to lack of an efficient and reliable payment system, productive activities would also be sluggish.

The NRPS may not be a panacea but it is certainly a major step towards an efficient, reliable and economy-boosting payment system. As an enabling regulatory framework, the NRPS therefore encourages cooperative arrangements called Automated Clearing Houses (ACHs) where banks establish their clearing and settlement rules and interconnect through a clearing switch operator like the Philippine Clearing House Corporation (PCHC) and Bancnet to allow interbank fund transfers or payments. It is noteworthy that the NRPS also brings non-bank electronic money issuers such as Paymaya and G-cash into play, allowing transfer of funds from bank accounts to nonbank e-money accounts or vice versa.

PESONET AND INSTAPAY ACHS

The two ACHs that have been established so far — PESONet and InstaPay — have been instrumental in breaking closed-loop payment services. PESONet went live in November 2017 and InstaPay followed in April 2018.

The BSP has prioritized PESONet to address the need of corporate users and the govern- ment for an efficient and reliable channel for collections and disbursements. PESONet is a batched electronic fund transfer (EFT) service which is a better alternative to the still widelyused paper-based check system.

PESONet enables business entities, the government, and individuals to conveniently initiate and receive electronic funds transfer from a transaction account, which could either be a bank or e-money account. Unlike a check, PESONet allows receipt of funds on the same banking day the sender initiates the payment within a certain cut-off time.

What makes PESONet more appealing is that the recipients are not charged for the electronic crediting of the funds to their accounts. Thus, they receive the transferred funds in full. These remarkable features make the PESONet perfectly suitable for business-to-business (B2B) payments, payroll and loan disbursements, and dividend payouts.

To optimize the benefits of this pioneer ACH, PESONet will be tapped to facilitate government-to-government (G2G) and person-togovernment (P2G) collections and payments.

With all these revolutionary changes, the BSP has been closely monitoring the widening reach of PESONet. So far, the numbers have been pleasing, showing 46 BSP-supervised financial institutions (BSFIs) participating in the PESONet ACH as of date.

InstaPay is another ACH that also allows funds transfer to happen almost instantly any time of the day all year round. Being real time, InstaPay addresses low-value and urgent payment requirements. For instance, a worker in Manila can use InstaPay to send money to an ill family member dwelling in the province or a parent can transfer funds via InstaPay to the account of his son who needs to settle his tuition right away to be able get an examination permit.

InstaPay can also be used to pay purchases from businesses through their bank or e-money accounts. Like PESONet, funds transferred via InstaPay are also received in full amount. While each transaction is capped at P50,000, a sender can make as many transactions as he wants in a day.

Given its ability to deliver funds transfer in seconds, InstaPay is being positioned to serve as efficient channel to facilitate payments to the government for licenses, permits, and taxes. Certainly, InstaPay relieves Filipinos from a lot of pains and troubles as they need not leave their homes or places of work to send and receive funds.

To date, consumers can transfer funds via InstaPay through 18 participating BSFIs. Moreover, there are now 33 BSFIs allowing their accountholders to receive funds via InstaPay.

COLLABORATION IS KEY

Several years ago, the NRPS started as a controversial topic in the financial community until it grew into an ambitious vision that has started to materialize through collaboration between the BSP and the stakeholders in the payment ecosystem.

To keep the flame burning, the BSP continues to collaborate with the Philippine Payments Management, Inc. (PPMI), an industry-led body recognized by the BSP to govern payments, in promoting digital finance solutions and addressing the payment challenges encountered by government, businesses and ordinary consumers.

In an effort to provide an environment that encourages and nurtures collaboration between the BSP and the industry, the BSP has issued the NRPS framework and operating guidelines aimed at promoting a level playing field and greater participation even of smaller players in the payment system.

The BSP is also coordinating with other government agencies to further drive growth in electronic payments. Recognizing the effectiveness of face-to-face conversation in facilitating actions and agreements, the BSP, in partnership with the Department of Trade and Industry, also plans to spearhead a Government Payments Forum. The forum will be a productive avenue for raising issues and challenges in the adoption of e-payments by government agencies, finding the potential solutions, and coming up with collaborative arrangements to implement those solutions.

Additional automated clearing houses for existing and prospective payment streams are expected to be established over the course of two years, such as, but not limited to, debit cards, direct debit and large value payments. As more payment rails are made safe and efficient, and more convenient payment alternatives are made available to end-users, growth is expected for the Philippine economy, including creation of a more sustainable and financiallyinclusive ecosystem.

WHAT'S NEXT?

There are more BSP initiatives in the pipeline. In particular, the BSP is looking at the potential of the Quick-Response (QR) Code to drive the utilization of electronic payments since almost every entity including a market vendor, cab driver, or variety store owner can possibly operate with the use of a QR code as mode for accepting payments.

Currently, the country is at the infancy stage as regards QR code adoption, with only few institutions actively promoting the use of this code. Thus, the BSP intends to place the operation of QR Code under the NRPS umbrella, pushing for a National QR Code Standard that will enable interoperability of QR Code-based payment facilities.

The BSP is also working on ensuring that “bills payment” forms part of the electronic financial and payment services offered by banks and non-bank electronic money issuers. With the bills payment service, consumers will be able to save much time and effort in settling their periodic bills as well as their fees for government licenses and permits.

In addition, the BSP is keen on supporting the establishment of a “direct debit” ACH. This ACH will address the inconvenience and inefficiency of issuing many checks to cover payments for regular amortizations and installments.

For instance, a car buyer availing of an inhouse financing scheme will not need to issue any check, instead, will only electronically make a debit authority for the dealer whose bank shall present said authority to the buyer’s bank for the collection of every amortization on due date.

The journey towards efficient and reliable payment system seems to be tedious yet rewarding. As more payment alternatives are made available, an ordinary Filipino gets to realize the benefits of digital payments. Leading the country in this journey, the BSP remains motivated in providing a supportive policy environment that enables innovative payment solutions to thrive. With the support of other stakeholders including the industry and the concerned government agencies, speeding up the conduct of productive undertakings through accelerated velocity of payments to fuel economic growth is only a matter of time.