BSP starts 1-day check clearing in Jan

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) will adopt the electronic clearing of checks starting Jan. 20 wherein checks would be cleared within one day from the current three days.

The BSP has issued Memorandum No. 2016-012 informing banks about the adoption of the clearing of checks via electronic presentment as approved by the Monetary Board.

“To ensure the smooth implementation of this new process, banks are enjoined to actively participate in the preparations for the electronic check clearing,” the central bank stated in the memo.

The BSP has designated Philippine Clearing House Corp. (PCHC) as the exclusive provider of electronic check clearing services and will be tasked to implement the clearing of checks via electronic presentment through its Check Image Clearing System (CICS).

Using the CICS, only the digital images of checks and its electronic payment information would be transmitted to the paying bank unlike the previous clearing system that requires the physical delivery of checks.

The new check clearing process is expected to speed up the crediting of funds to depositors’ account from three to five banking days to only one banking day.

Aside from promoting financial consumer welfare, this reform initiative enhances the efficiency of the domestic payment system and promotes the faster movement of goods and services in the country.

The BSP recognizes the importance of check clearing to the domestic payment system.

Last July 12, the BSP and PCHC signed a memorandum of agreement to operationalize the CICS. The bank regulator vowed to take a more active role in supervising the country’s check clearing system by reviewing PCHC regulations as well as examining PCHC arrangements, processes and systems for check clearing.

The BSP is pursuing reforms to enhance the efficiency of the payment system as this is critical to the promotion of the country’s financial stability.

Data showed PCHC processes about 700,000 checks every day with an average value of P135 billion.

A study by the Better than Cash Alliance in 2014 revealed only one percent of the monthly retail transactions are done in electronic form.

The BSP is committed to promoting the modernization of its payment system through projects like the National Retail Payment System (NRPS) and other payments innovation projects to put in place secure, efficient, and affordable electronic payment platforms to drive the growth of trade and commerce.