BancNet@27: Enabling easy, secure and reliable e-payments

WHEN it comes to payment options, nothing beats the ease and convenience that comes with electronic payments. With the help of modern technology, one does not have to carry cash all the time. With the swipe of a card, press of a button, or a few clicks on the web browser or mobile app, all your payments and purchases can be made quick and hassle-free. No wonder more and more people are turning to electronic payment (e-payment) as a viable alternative to cash transactions.

For companies, organizations, businesses and establishments, having an e-payment capability adds value to the range of products and services offered. Whether traditional shops or online mechants, e-payment can help make running the business easier. This technological solution is specifically designed to meet the unique needs of both small and large businesses alike. Simply put, today’s business environment requires e-payments solutions that are secure, fast, reliable and supports the latest payment technologies to optimize payment acceptance and increase productivity in managing operations.

BancNet — the Philippines’ first and now the only Automated Teller Machine (ATM) consortium — has been at the forefront of preparing for the implementation of the National Retail Payment System (NRPS), a vision for a safe, easy, efficient and reliable e-payment system nationwide.

NATIONAL RETAIL PAYMENT SYSTEM (NRPS)

When the Bangko Sentral ng Pilipinas (BSP) established its framework for a National Retail Payment System (NRPS), it envisioned a Payment System Management Body (PSMB) whose primary role is to govern a network of automated clearing hubs (ACH) for different types and modes of payment. Each will have a clearing switch operator (CSO). Earlier this year, the BSP identified two priority ACHs to be created immediately: a low-value, real-time credit push and batch electronic funds transfer.

BancNet was designated as the CSO for low-value real-time credit push. To better prepare for the eventual rollout of the NRPS, BancNet earlier studied electronic payment systems in India and Singapore in order to learn best practices in foreign markets and better draw an e-payments roadmap for the Philippines which aimed to spur the growth of electronic funds transfer and payments.

INSTAPAY

BancNet built the infrastructure for lnstaPay, the country’s Interbank Funds Transfer (IBFT) credit platform and application, its initial foray into web service implementations via REST application protocol interfaces (API) secured by tokenization and Public Key Infrastructure (PKl) services. This supports realtime crediting of funds from a bank’s sending account to another bank’s receiving account and enables the sending of sender and recipient information to address the Know Your Customer (KYC) requirements of the BSP.

Meanwhile, to address the requirement for an efficient and reliable retail payment system, BancNet continued its modernization and optimization program, completely upgrading its

servers and database with the latest technology to provide faster, more efficient and reliable storage and server performance.

In line with supporting BSP’s vision for the NRPS, BancNet began the transition towards being a utility company. Under this business model, the switch will be operated as an industry utility, offering only core switching and no value-added services. BancNet amended its articles of incorporation and bylaws to reflect this shift and clearly identified which of the services are core and which are value-added. BancNet retained the e-GOV platform as a core service — although it was classified as a value-added service — in order to provide a single efficient link to the government that all members can share, in line with the objective of an e-payments road map.

EMV AND 2FA: TWIN SAFEGUARDS FOR SECURE BANKING

In its early years, all faceto-face credit or debit card transactions used a magnetic stripe (magstripe) to read and record account data, and a signature for verification. But this system has a number of security flaws. Unscrupulous individuals have begun using electronic devices to illegally read, store and write personal data from magnetic stripes. That information can subsequently be copied into a counterfeit card complete with security holograms, making cards easy to clone and use without the owner’s knowledge.

To combat this growing security threat, the BSP and BancNet have embarked on the migration of all ATM, credit and debit cards to EMV (Europay, Mastercard and Visa), a global standard that equips cards with high-tech computer chips and securely authenticates chip-card transactions. Through the joint efforts of BSP and BancNet, the banking industry is steaming full speed ahead towards full adoption of EMV technology at a much faster pace.

But due to the sheer volume of magstripe cards in circulation that need to be replaced, the BSP Monetary Board (MB) gave banks until June 30, 2018 to fully replace older magstripes into new EMV-enabled chip cards.

For its part, BancNet remained undaunted in testing and certifying members’ ATMs as well as their host systems, chip card personalization validation, and terminals and certified to their EMV compliance. It used tools developed by the implementation services partner, FlME, an independent global leader in integration testing services for smart devices and secure chip-based applications. Today, most of BancNet members’ host systems are EMV compliant.

Moreover, member-banks have also equipped about 90-percent of all ATMs with sophisticated anti-card skimming devices to prevent card skimming, viral intrusion and unauthorized access.

Another security solution developed to counter fraudsters is the two-factor authentication (2FA) system that requires the keying in of other information that only the cardholder knows for identity verification. These are his user name, password, and a one-time PIN. The 2FA is an added layer of security on top of the ATM PIN so that even if the cardholder’s card data and his PIN are skimmed at an ATM, his account cannot be accessed by the fraudster on the BancNet website. The 2FA will ensure that the person transacting is the real owner of the account.

BancNet developed this new security feature for www.

bancnetonline.com to make online banking even more secure. Among the members participating in the 2FA system are: Asia United Bank, BPI BankO, CTBC Bank, City State Savings Bank, DBP, Enterprise Bank, Entrepreneur Bank, Equicom Savings Bank, Luzon Development Bank, MASSSPECC, Maybank, Pacific Ace Savings Bank, PBCom, Philippine Business Bank, Philtrust Bank, PostBank, Sterling Bank Of Asia, Sun Savings Bank, Tiaong Rural Bank, UCPB, UCPB Savings, Veterans Bank, Wealth Bank and World Partners Bank.

BRIGHT FORECAST

The International Monetary Fund (lMF) expects the Philippines to book the fastest economic growth in the region over the next two years amid the projected stronger global economic recovery. BancNet will take advantage of this bullish economic forecast to continue the aggressive pursuit of business strategies aimed at expansion and growth, particularly in boosting e-payments. For one, BancNet will continue to support EMV migration and certification for its members. Being fully EMVcompliant will help ensure safer payment transactions at ATMs and POS terminals. BancNet will also continue to enhance its credit transfer facility for InstaPay, including enabling credit to non-ATM-linked accounts, in order to further encourage more participation by individual customers, formulating the rules that will govern members’ participation in InstaPay within 2017.

As the first multi-bank, multichannel electronic payment network in the country, BancNet is the sole provider of an extremely important banking service to nearly 60 million customers. For 27 years now, it remains confident in its ability to meet the expanding needs of the banking public. Count on BancNet to remain at the forefront of the electronic payments landscape, powered by the constant and unwavering support from stockholders and the dedication of its directors, committee members and employees.

WHEN THE BANGKO SENTRAL NG PILIPINAS (BSP) ESTABLISHED ITS FRAMEWORK FOR A NATIONAL RETAIL PAYMENT SYSTEM (NRPS), IT ENVISIONED A PAYMENT SYSTEM MANAGEMENT BODY (PSMB) WHOSE PRIMARY ROLE IS TO GOVERN A NETWORK OF AUTOMATED CLEARING HUBS (ACH) FOR DIFFERENT TYPES AND MODES OF PAYMENT.