InstaPay and PESONet Working towards a cash-lite economy
To increase retail electronic payment transactions to 20% by 2020 and ultimately improve the country’s economic competitiveness, the Bangko Sentral ng Pilipinas (BSP), together with industry stakeholders, launched the National Retail Payment System (NRPS) Framework on December 09, 2015. The NRPS is a flagship BSP program that aims to create a safe, efficient, reliable, interconnected and interoperable electronic retail payment system.
To assist the BSP in overseeing the national payments system, an industry-led, self-governing body of direct clearing participants called the Payment System Management Body or PSMB was created on March 31, 2017.
During Governor Nestor A. Espenilla Jr.’s first year as BSP Governor, implementation of the NRPS was effected through the launch of two specific Automated Clearing Houses (ACHs): PESONet on 8 November 08, 2017 and InstaPay on April 23, 2018.
Both ACHs will immediately provide digital payment solutions to the current payment challenges encountered by government, businesses and ordinary consumers.
The Philippine EFT System and Operations Network or “PESONet” is a batch electronic fund transfer credit payment scheme which supports bulk payment transactions of various users. For instance, companies (including the government) will be able to conveniently pay salaries and invoices directly to the bank account of choice of their employees and suppliers. There will be no more need for employees and suppliers to maintain several accounts (such as payroll accounts) to receive and make payments affordably.
Through PESONet, funds can be received by recipient account/s in full within the same banking day or immediately upon clearing. For greater transparency, and to help clients determine which electronic fund transfer (EFT) products offer the best value, all participating banks and BSP supervised financial institutions (BFSIs) are required to disclose the details of fees charged to clients. A bulletin board of fees will soon be available on the BSP website.
PESONet is a more inclusive platform for EFTs which will make business-to-business (B2B), and customer-to-business (C2B) payments more practical. It enables digitization of government-to-government (G2G) and personto-government (P2G) collections and payments. PESONet participation is open to smaller industry players such as thrift and rural banks.
Other expected gains from PESONet are lowered costs; more efficient budget administration on government’s part; better liquidity management on private businesses’ side; and increased economic activity due to the accelerated velocity of payments and immediate availability of funds. Digital innovation in the delivery of financial services, and greater financial inclusion leveraging on technology to reach the financially unserved and underserved are also anticipated outcomes.
Instant Payments or “InstaPay” is a realtime low-value push payment scheme designed to facilitate small value payments conveniently and affordably. InstaPay enables merchants to accept digital payments from both e-money and bank accounts even without a POS. It allows MSMEs to build a rich digital transaction history through the making of electronic payments. This will help establish MSME creditworthiness, allowing MSMEs greater access to credit from formal lending institutions. Electronic payments can also provide access to other financial services.
Through InstaPay, consumers need not leave their homes or places of work to withdraw cash and make over-the-counter payments. Conveniently available on electronic delivery channels through mobile apps and internet banking facilities provided by participating banks and e-money issuers, on a 24 hour basis, 365 days a year, payments via Instapay can be made anytime of up to PHP50,000 per transaction, without limit, in a day. Payments can be made even after banking hours, on weekends or holidays. With InstaPay, electronic payments can also be made to the government for taxes, licenses, and other fees in real time.
The transferred funds are instantly received in full as no fee is charged for the electronic crediting of funds to the receiving party’s account in InstaPay participating institutions. Charges may apply to sending parties. Recipients may also be charged for cash withdrawals.
During its launch, Governor Espenilla hailed InstaPay as “innovative.” He stressed that InstaPay is “expected to create new markets and add new value.” The Governor also highlighted the importance of working together with the private sector to push for the adoption of electronic payments. He said that broader utilization of these platforms will accelerate economic growth and make the Philippines more competitive.
As of June 26, 2018, PESONet already has 42 participants. InstaPay, on the other hand, has ten 10 participants capable of sending and receiving payments and another 15 are able to receive payments. Participants are comprised of universal, commercial, thrift and rural banks as well as non-bank EMIs. The number of participants is expected to increase as the demand for better EFT services intensifies.