BSP, banks establish shared clearing, settlements system

The Bangko Sentral ng Pilipinas (BSP) and major stakeholders in the banking industry signed an agreement for a establishment of a shared clearing and settlements system as part of the National Retail Payment System (NRPS).

BSP Governor Amando Tetangco Jr. said various industry players signed two landmark agreements on the Charter of the Payment System Management Body (PSMB) as well as their commitment to form two priority Automated Clearing Houses (ACHs) within the year.

“The PSMB is a critical and unique entity that will serve as a strong foundation of a modern digital retail payment system in the Philippines,” he said.

Tetangco said the ACHs include the Batch Electronic Fund Transfer (EFT) Credit ACH to be called “PESO Net” and the Real Time Low Value Push ACH to be called “InstaPay.”

“As a fine example of public private partnership, the BSP and the payments industry will work together to promote the sound development of a payment system based on the principles of cooperation, good governance, healthy competition and consumer protection,” he said.

During the transition period, the Philippine Clearing House Corp. (PCHC) would be designated as the interim clearing switch operator for the PESO Net.

On the other hand, Bancnet would be named as the interim clearing switch operator for InstaPay, in order to leverage on their existing capabilities and fast track start of operations.

After the transition period, the two ACHs would determine best arrangements for their clearing switch service requirements in a manner consistent with NRPS principles.

The NRPS through the ACHs allows the provision of payment options where clients can choose what payment product is most convenient, efficient, and cost effective.

The BSP chief said the NRPS aims to increase retail electronic payments transactions to 20 percent of total transactions by 2020 from one percent, based on 2013 country diagnostics made by the Better Than Cash Alliance.

BSP Deputy Governor Nestor Espenilla Jr. said NRPS promotes competition in terms of quality, availability, and wide array of electronic payment products and services, innovation that introduces safety, speed, and convenience to encourage usage, creation of new business models adapted to the needs of target markets, and customer pricing that are reasonable and market-based.

“One of the issues we are trying to solve here is right now, the economy basically runs on cash payments. So everything is cash. There’s really a cost to using cash in the system,” Espenilla said.

The BSP spends a lot of money to make money literally and it is also a big logistical operation on the part of the BSP, according to Espenilla.

“That’s another benefit that is available here that will boost gross domestic product growth,” he said.

The US Agency for International Development (USAID) estimates the NRPS would boost GDP growth by two to three percent.