BSP enhances settlement of digital payments

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has approved amended guidelines to further enhance the settlement of digital payments, ensuring the integrity and efficiency of the country’s payment system.

In a circular signed by BSP Governor Eli Remolona Jr. on June 27, the Monetary Board approved the changes to the guidelines on the settlement of electronic payments under the National Retail Payment System (NRPS) framework.

The BSP said the revised guidelines provide operational flexibility to automated clearing houses (ACHs) organized under the NRPS Framework. These include InstaPay and PESONet.

“The circular requires prior BSP approval for new rules or enhancements to the settlement of e-payments under the Manual of Regulations for Payment Systems (MORPS),” the BSP said.

“This ensures that all enhancements to the settlement guidelines of ACHs are thoroughly reviewed and approved by the BSP prior to implementation,” it said.

Under the new rules, ACHs can now submit requests to the central bank for adjustments they believe are necessary to enable more settlement cycles, support faster settlement and improve the overall efficiency of e-payments.

For instance, subject to BSP approval, an ACH may propose using a particular demand deposit account maintained with the BSP when settling e-payments instead of a separate DDA. This request can be made in response to changing circumstances or the emergence of new use cases.

On the other hand, the BSP, Philippine Payments Management Inc. (PPMI) and the PESONet steering committee activated the third settlement cycle for PESONet transactions on July 8.

According to the central bank, the PESONet’s multiple batch settlement (MBS) facility began a midday settlement, increasing its batch settlements to three cycles per banking day.

The new cycle adds to the earlier two settlements carried out in the morning and at the end of a banking day.

“The rollout of ‘PESONet 3MBS’ shortens clearing intervals within a banking day, improves user experience by enabling faster crediting of funds to recipients’ accounts, and facilitates easier cash flow management for businesses,” it said.

“It likewise enables PESONet participating banks and electronic money issuers better to manage settlement risks as settlement of PESONet transactions are now divided among three batches in a banking day,” the BSP added.

PESONet and InstaPay are ACHs launched in December 2015 under the NRPS to promote a safe, efficient, affordable, inclusive and reliable retail payment system.

PESONet enables high-value transactions and may be considered as an electronic alternative to the paper-based check system. InstaPay is a real-time, low-value electronic fund transfer facility for transactions of up to P50,000 and is most useful for remittances and e-commerce.

The value of electronic fund transfers coursed through the PESONet and InstaPay jumped by 34.6 percent to hit P7.98 trillion in the first half from P5.93 trillion in the same period last year, according to the latest central bank data.

The share of digital payments to total retail transactions jumped to 53 percent last year from 42 percent in 2022.