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Philippines: Retail payment systems

Pending legislation

A law providing for the regulation and supervision of payment systems has been proposed and is now pending before the Philippine senate for transmission to the president for final approval (the House of Representatives adopted the Senate version of the bill as an amendment to the House version and this was transmitted to the Senate on October 3 2018). If the proposed law is passed in its existing form, it will grant the Bangko Sentral ng Pilipinas (BSP) supervisory and regulatory authority over payment systems in the Philippines. The proposed law mandates the registration of payment system operators and limits those allowed to operate payment systems to persons and entities that obtain advance approval from the BSP.

The NRPS framework

In 2017, the monetary board of the BSP also approved the adoption of the National Retail Payment System Framework (NRPS). The NRPS is a policy and regulatory framework that aims to establish a safe, efficient and reliable retail payment system in the Philippines. The BSP, through No. Circular 980 (2017), mandated all BSP-supervised financial institutions (BSFIs) to adhere to the NRPS, required that all clearing activities of BSFIs be coursed through the NRPS governance framework, and prohibited exclusive bilateral clearing arrangements.

The NRPS covers all retail payment-related activities, mechanisms, institutions and users and applies to all domestic payments which are denominated in Philippine pesos that may involve payment for goods and services, domestic remittances or fund transfers. Retail payments under the NRPS are payments that meet at least one of the following characteristics:

  • The payment is not directly related to a financial market transaction.
  • The settlement is not time critical.
  • The payer, the payee, or both are individuals or non-financial organisations.
  • The payer, the payee, or both are not direct participants in the payment system that is processing the payment.

Under the NRPS, governance functions must be performed by a payment system management body (PSMB) which must be an industry-led self-governing body duly recognised by the BSP. In August 2017, the Bankers Association of the Philippines incorporated the Philippine Payments Management, Inc. (PPMI), which is intended to stand as the supporting body of the BSP in setting up clearing houses for digital payments. In its Resolution No. 59 (2018), the Monetary Board of the BSP recognised PPMI as the PSMB under the NRPS framework.

Jan Celine C
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