BSP sets rules on merchant payment activities
The Bangko Sentral ng Pilipinas (BSP) has circulated proposed rules on the conduct of merchant payment acceptance activities to ensure both banks and non-banks are adopting appropriate measures relating to payment system operations.
The draft regulation on merchant payments includes the management of risks related to settlement, operations and data protection. These rules are also related to information technology (IT) and cybersecurity; antimoney laundering and countering terrorist and proliferation financing (AML/CTPF); and end-user protection.
Based on the draft circular, the framework on merchant payment acceptance activities “ensures that entities that facilitate merchant payment acceptance adopt commensurate governance structures and appropriate measures to effectively manage risks attendant to their business model.”
The BSP defines merchant payment acceptance activities as services provided to a merchant that allows it to accept various payment instruments by collecting and processing the related transaction information. Merchants, in this case, refers to physical or electronic retailers, service providers, billers and/or businesses that accept payments for goods and/or services.
“In general, the services include transferring of funds collected on behalf of merchants to transaction accounts of merchants, processing of payments, securing the payment, and facilitating the collection and transmission of data for the processing of payment transactions,” said the BSP.
The proposed rules cover the following: the granting of a license to conduct merchant payment acceptance activities; capital requirement; governance; AML/CTPF requirements; merchant onboarding/monitoring/ dispute resolution; end-user protection; information technology risk management; pricing mechanism; outsourcing; reportorial requirements; and enforcement action.
In terms of capital requirement, the draft circular said the required capital for merchant acquirers will depend of the size. A merchant acquirer directly or indirectly enables a merchant to accept various payment instruments through its merchant payment acceptance services.
For a large-scale merchant acquirer with 12-month transactions of ₱100 million and above, the required capital is ₱20 million. For the smaller entities that have more than ₱5 million transactions but less than ₱100 million, the required capital is ₱5 million.
License fees for merchant acquirer category will range from ₱25,000 to ₱60,000 while the filing fees are from ₱10,000 to ₱20,000.
Entities that have secured a Merchant Acquisition License will be considered compliant with the registration requirements as an operator of payment system or OPS.
The BSP said proposed policy will cover Bsp-supervised financial institutions (BSFLS) such as banks and electronic money issuers-nonbank financial institutions (EMI-NBFIS), including cooperatives, as well as nonfinancial institutions (NFIS) that conduct or intend to conduct merchant payment acceptance activities in the Philippines.
Based on its policy statement, the BSP will enable merchants to accept different forms of payments from their customers which is “vital in facilitating the smooth flow of funds in the economy and contributing to the wider adoption of digital payments in the country.”
“For digital payments to thrive, minimum standards and good practices to safeguard the funds received from customers of merchants and to protect the rights and interests of end-users (i.e., merchants, customers) that deals with entities that facilitate merchant payment acceptance must be established,” said the BSP.
The draft circular has a feedback deadline of Dec. 15, 2023 which the BSP considers enough time for BSFIS to send in their suggestions or recommendations regarding the proposed framework.