The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has approved amended guidelines on the “Settlement of Electronic Payments under the National Retail Payment System (NRPS) Framework” as part of ongoing efforts to ensure integrity and efficiency of the payment system.

Issued under Circular No. 1196 on 27 June 2024, the revised guidelines provide operational flexibility to Automated Clearing Houses (ACHs) organized under the NRPS Framework.

ACHs established under the NRPS are InstaPay, a real-time, low-value digital payments facility serving as a substitute for cash transactions; and PESONet, a batch electronic funds transfer service that is a viable alternative for checks and recurring payments.

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). This ensures that all enhancements to the settlement guidelines of ACHs are thoroughly reviewed and approved by BSP prior to implementation.

Under the policy, ACHs may now lodge requests with the BSP when they deem that adjustments 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 recommend the use of a particular demand deposit account (DDA) maintained with the BSP when settling e-payments, instead of separate DDAs. This can be requested in view of evolving circumstances, or when there are new use cases.

Meanwhile, the BSP, Philippine Payments Management Inc. (PPMI), and PESONet Steering Committee activated the third settlement cycle for PESONet transactions last month.

The PESONet’s Multiple Batch Settlement (MBS) facility began a midday settlement that increased its batch settlements to three cycles per banking day.

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

The roll out 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 likewise enables PESONet participating banks and electronic money issuers to better manage settlement risks as settlement of PESONet transactions are now divided among three batches in a banking day.

Earlier, BSP said the share of digital payment transactions to total monthly retail payments in the Philippines grew from 42.1 percent in 2022 to 52.8 percent in 2023, according to the  2023 Report on E-Payments Measurement.

This indicates that the central bank has surpassed its target of digitalizing 50 percent of digital payments volume in the country under its Digital Payments Transformation Roadmap 2018-2023.

“We take pride in this achievement as proof that our pursuit of a cash-lite economy has consistently been progressing. We owe this to our citizens who are the foremost beneficiaries of a safe, efficient, and inclusive digital payments system. As we serve their payment needs and deepen financial inclusion, we are ready to bring digital finance to new heights,” said BSP Governor Eli M. Remolona.

In terms of value, the latest e-payments measurement also showed that the share of monthly digital payments to total transactions increased to 55.3 percent in 2023 from 40.1 percent in 2022.

The main contributors to the rise in e-payments were merchant payments which accounted for 64.9 percent of monthly digital payments volume, person-to-person transfers at 19.3 percent, and business-to-business supplier payments at 6.1 percent.

This is consistent with the growth in ownership of transaction accounts, which are mostly e-money accounts that are increasingly used for payments.

With the country’s progress in digital payments adoption, the BSP, in partnership with the payment industry, is strategically positioned to advance digital payments and to empower Filipino businesses and consumers into becoming more active contributors to economic growth.

“We should not rest on our laurels. Achieving the target is not the end goal. What we would like to see are lives being transformed by our policies,” Remolona said.