BSP tightens rules on e-money

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has issued landmark guidelines formalizing electronic money transactions — the first of its kind of electronic innovation in the world.

In the new guidelines, the BSP said e-money is not considered deposits so they would not be covered by the deposit insurance of the Philippine Deposit Insurance Corp. (PDIC).

The new rules also set a maximum monthly load limit of P100,000 on any e-money instrument such as cash cards, e-wallets and the like. Authorities also placed e-money transactions as covered by the Anti Money Laundering Law.

The BSP said the Monetary Board approved the circular that provided the regulatory framework over the fast-growing electronic money business in the Philippines to provide protection for consumers and to promote innovations in fund transfer mechanisms that benefit Filipino consumers.

The BSP said that under its rules, e-money was defined as “a monetary value electronically stored in convenient payment instruments” such as cash cards and the so-called e-wallets accessible through mobile phones or other access devices.

The growing popularity of these instruments, according to the BSP, made new rules and regulations necessary to lay down the policy framework governing the innovation.

E-money was first introduced and made popular by telecommunication companies that offered e-wallets as well as department store chains whose traditional gift certificates have since evolved into cash cards.

“E-money is an electronically-stored monetary value that consumers can use to buy or pay for goods and services, to transfer or remit funds, and/or to withdraw funds,” the BSP said.

E-money instruments include cash cards, e-wallets accessible via mobile phones or other access device, stored value cards, and other similar products.

Under the regulations, the BSP said e-money issuers or EMIs are required to register with the central bank and to institute systems to maintain accurate and complete record of e-money transactions and other pertinent information.

The BSP said e-money shall only be redeemed at face value and since it was not considered a deposit, it would not be insured with the Philippine Deposit Insurance Corp. (PDIC).

The BSP also placed an aggregate monthly load limit on e-money instruments amounting to P100,000. EMIs were also required to ensure compliance with applicable requirements of the Anti-Money Laundering laws, rules and regulations.

Under the rules, the BSP said entities holding the value in exchange for electronic credits received would fall under its regulations which classified them into three categories of institutions that may operate as e-money issuers.

The rules specified EMI(electronic money issuer)-Banks which were banks that want to be an EMI and would be required to apply for EMI license with the BSP.

Also required to register were EMI-NBFIs or non-bank financial institutions which were not currently covered by the BSP’s regulations on e-banking.

Finally, the BSP said it also required the registration of other non-bank institutions that were not registered with the BSP but want to be EMIs. These include Globe/G-Xchange for its G-Cash.

The BSP said non-bank institutions not yet registered with the BSP but intending to be an EMI shall likewise register as money transfer agent under the above regulations.

To qualify for registration, the BSP said these issuers have to comply with the requirements detailed in the circular and even non-bank institutions already registered with the BSP as a money transfer agent would still have to comply with the additional requirements mentioned in the EMI circular.

Under the circular, EMIs classified as EMI-Others should be a stock corporation with a minimum paid-up capital of P100 million and were engaged only in the business of e-money. _The BSP said it prescribed the minimum requirements for each EMI category to ensure that the risks inherent in e-money business were mitigated and that EMIs adhere to prescribed levels of safety, security and soundness.