Bangko Sentral ng Pilipinas allows retail outlets to act as e-money agents

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) will soon allow convenience stores, store chains and other mass retailing outlets to function as e-money agents, especially in areas not served by actual banks or automatic teller machines.

The BSP said the idea was one of many innovations that officials were studying to widen the reach of banking services that could be made available to the rural countryside where banks do not operate.

BSP deputy governor Nestor Espenilla Jr. told reporters the central bank was finalizing the rules that would implement the innovation and take advantage of the deep penetration of mobile telephony all over the country.

According to Espenilla, telecommunication companies have led the innovation curve with the use of cellular telephones for such transactions as transfers and even bills payments.

Espenilla said the idea was to use certain business establishments as e-money agents that would facilitate e-money transactions like purchases, bills payment and the like.

The BSP was initially looking at using even sari-sari stores and convenient store chains as agent banks that could take deposits and facilitate withdrawals but Espenilla said this was far too complex and risky.

Instead, Espenilla said the BSP wanted to take advantage of the national network of mobile telephones.

Espenilla said about 40 percent of all the municipalities in the country are not being served by any bank. “There are actually more mobile telephone users in the country than there are people who have bank accounts,” he said.

At present, there are two major players in the e-money business — Globe Telecoms with its G-Cash and Smart Telecoms with SmartMoney. Since its introduction, Espenilla said there are now over eight million e-money users in the country.

Espenilla said the BSP is studying the legal implications of this innovation and whether it would be allowed by the General Banking Law and the Anti Money Laundering Law.

Espenilla said the services of e-money agents could range from allowing consumers to open e-money accounts to balance inquiry and transactions such as converting cash into e-money and vice versa.

According to Espenilla, the e-money issuer will have to be specifically licensed by the BSP, but the e-money agents may not require this as they are third party agents.

In return for the service of facilitating e-money transactions, Eespenilla said retail establishments could charge a small fee.

“The next stage is convergence of mobile technology, electronic money and the traditional brick and mortar banking networks,” Espenilla said.

Espenila said similar schemes are already being implemented in other countries where retail outlets with point-of-sale machines are allowed to perform similar functions.

“An automated teller machine is really just a line, network connection and a box for cash,” he said. “Agent banks would perform the same function, dispensing cash from their cash on hand.”

Espenilla said the BSP has been doing preliminary studies, looking at experiences in other countries like Brazil that has done agent banking, expanding its net of 90,000 agent banks in three years.

However, Espenilla cautioned that the BSP needs to ensure that new models are safe and sound as well as compliant with regulations including Anti Money Laundering regulations and uphold consumer protection.

Espenilla said the BSP wants to explore technological innovations that would ultimately benefit small and medium-scale enterprises.

“We recognize the importance of electronic banking services particularly the underserved and unserved market that have difficulty in accessing the brick and mortar banking institution,” Espenilla said.

With competition and the falling cost of technology, Espenilla said banking services could be provided with increased convenience and lower costs. Expanding the net to include merchants, he said, was a natural extension of this process.