Govt institutionalizes use of digital payment

GOVERNMENT departments, agencies and instrumentalities are now required to offer digital modes to collect and disburse funds.

This after President Rodrigo R. Duterte signed last Thursday Executive Order (EO) 170 to insitutionalize the use of digital payments for government transactions.

“The digitalization of payments is in line with the government’s thrust to develop an inclusive digital finance ecosystem, in accordance with the ‘Digital Payments Transformation Roadmap 2020-2023’ and the ‘National Strategy for Financial Inclussion 2022-2028’ and will complement existing efforts to make formal financial services accessible to vulnerable and underserved sectors,” Duterte said.

Under the 6-page issuance, the government department, agencies, instrumentalities, including state universities and colleges, government-owned or controlled corporations under the executive department shall use “safe and efficient digital dibursement” for financial aid and payment of salaries and allowances to their employees and other activities involving releasing funds.

“For this purpose, covered agencies may use facilities of ‘Government Servicing Banks’ (GSB) such as ‘Advice to Debit Account’ or interoperable ‘Electronic Fund Transfers’ (EFT),” Duterte said.

The GSB will be allowed to collect fees for EFT services.

EO 170, however, emphasized that government offices under the executive department may still use non-digital payout channels in “exigency of service.”

Likewise, government offices are required to use digital modes for accepting payment.

“For this purpose, covered agencies may enage the services of established payment service providers, provided that only interoperable digital payment solutions which are compliant with the National Retail Payment System Framework shall be availed,” Duterte said.

A technical working group (TWG) composed by representatives from the Department of Finance (DOF), Department of Budget and Management (DBM), Bureau of Treasury (BTR), Bureau of Internal Revenue (BIR) and the Government Procurement Policy Board (GPPB) Technical Support Office was tasked in setting the policies for government’s digital payments.

The DOF, in coordination with other TWG members, will issue the implementing rules and regulations (IRR) for EO 170 within 90 days from the effectivity of the order.

The IRR will include the 6-month transition period for government offices to implement their digital disbursement and collection scheme.

The transition period may be extended to a longer period but should not exceed a period of three years from the issuance of the IRR.

EO 170 will take effect immediately after its publication in the Official Gazette or in a newspaper of general circulation.