Central Bank of Philippines and Local Payments Sector Introduce Digitalization, Financial Inclusion Initiatives

The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, and the payment systems sector are preparing to introduce various initiatives that are set to promote payments digitalization and financial inclusion in the Southeast Asian nation.

Benjamin E. Diokni, BSP Governor, stated (during a recently-held PPMI conference):

“The BSP will continue to work with the Philippine Payments Management, Inc. (PPMI) to ensure that every Filipino can have meaningful participation in an increasingly digital Philippine economy.”

Operated by payment industry professionals, the PPMI acts as a self-governing entity that’s  accredited by the BSP as the nation’s payment systems manager.

One of its main projects is the full roll-out of QR Ph for person-to-merchant (P2M) transactions, which should be available within the coming days.

Governor Diokno says that he’s “confident that this initiative will facilitate efficient digital payments to unbanked micro-entrepreneurs such as sari-sari store owners and tricycle drivers,”

BSP and PPMI are focused on introducing the PESONet Multiple Batch Settlement (MBS) by the end of 2021;  forming an interoperable bills payment facility by early next year; and launching the request-to-pay facility by Q2 2022.

From once a day, MBS will be increasing the frequency of PESONet settlements to twice a day. This should expedite the payment process for high-value transactions and also support various funding requirements for local firms.

As mentioned in the announcement, PESONet is a batch digital money transfer service that serves as an electronic alternative to the nation’s paper-based check system.

The interoperable bills payment facility should allow billers to collect from their client via digital channels, even if the payment service providers (PSPs) of the billers are not the same as those of the clients.

As noted in the update, the request to pay facility will be allowing payees to start collections by sending a request-to-pay to the payor. Payors don’t have to start the payment process and they will be receiving the account information of the payee and will simply have to authorize the payee’s payment request.

PPMI is also currently working on the onboarding process of other PESONet participating banking institutions and digital money issuers to the EGov Pay ecosystem, a virtual payment facility for tax collection, obtaining permits/licenses, fees and various other government tasks.

The BSP and the local payments sector are also reportedly working on their direct debit service project, which should support the payer to send the payee an electronic authority to take out  funds  from the payer’s account. This is suitable for handling recurring payments like rental transactions, regular loan amortizations, and quarterly insurance premiums.

Governor Diokno added:

“These challenging times have taught us to adapt, be more agile and to find innovative ways to continue thriving. In a way, the pandemic gave us an invaluable opportunity – and one that we must seize – to build and enhance our capacities for digital transformation,”