Rody signs law on safe payment systems

President Duterte signed into law on Oct. 30 a measure that regulates payment systems in the country.

Republic Act 11127 or the National Payment Systems Act seeks to promote, through the Bangko Sentral ng Pilipinas (BSP), a safe, efficient and reliable operation of payment systems to control systemic risks and ensure an environment conducive to sustainable growth.

A payment system is the set of payment instruments, processes, procedures and participants that ensures the circulation of money or movement of funds.

There is a systemic risk if the failure of a participant in the payment system or financial markets to meet its obligations would cause other participants to be unable to meet theirs.

Under the law, the BSP shall oversee the payment systems in the Philippines and exercise supervisory and regulatory powers to ensure the stability and effectiveness of the monetary and financial system.

The central bank was given the power to designate a payment system to prevent risks and to protect the public interest. It also has the power to require operators of the designated payment system to secure prior authority from monetary officials.

Operators were defined as any person who provides clearing or settlement services in a payment system or defines, prescribes, designs, controls or maintains the operational framework for the system.

The BSP may also accredit or require a payment systems management body organized by participants of the designated payment system for self-regulation.

All operators of payment systems are required to register with the BSP within six months from the effectivity of the law. Operators of the designated payment system except those operated by the BSP must incorporate as stock corporations and should meet the requirements set by the monetary board.

The acquisition of shares in an operator of a designated payment system that will result in ownership or control of more than 10 percent of the voting stock of the operator has to secure prior approval of the monetary board. The BSP may also tap a manager to manage the operations of the operator of a payment system if necessary.

The monetary board was given the power to impose administrative sanctions on erring payment system participants. The monetary board will determine the fines to be imposed on violators but they should not exceed P1 million for each transactional violation or P100,000 a day for each continuing violation.

Persons or entities that willfully violate the law, rules or directives promulgated by the monetary board shall be punished by a fine ranging from P200,000 to P2 million or by imprisonment of two to 10 years or both, depending on the decision of the court.