“The BSP encourages Filipinos to actively use their accounts for digital payments, savings, and investments. The central bank is working with the industry to bring more of our countrymen into the fold of the formal financial system”
“The BSP is harnessing digital technology to empower sectors which have been traditionally underbanked. We think our open financial framework will unlock opportunities for consumers.”
Eli Remolona, Jr., BSP (Bangko Sentral ng Pilipinas) Governor, said the central bank has been relentless in bringing digital technology to various parts of the country, giving market vendors, public transport drivers, and other merchants a more convenient way of accepting e-payments for their transactions.
“The BSP encourages Filipinos to actively use their accounts for digital payments, savings, and investments. The central bank is working with the industry to bring more of our countrymen into the fold of the formal financial system,” Remolona said.
Besides keeping prices stable, supervising banks, and maintaining the stability of the entire financial system, another crucial role of the BSP is overseeing the country’s payments and settlements system.
An efficient one is essential for the effective implementation of monetary policy and the smooth functioning of money and capital markets.
At the forefront of the bank’s policy agenda is the provision of payment solutions attuned to the evolving needs of Filipinos.
The years after the lockdowns brought by the COVID-19 pandemic in 2020 saw notable progress in the continued rise and wider adoption of digital technology in the payments landscape.
The BSP has issued key policies that promote increased efficiency and stability to strengthen confidence in the use of digital payments.
In embracing a cash-lite society, both domestic and cross-border, internationally accepted standards for payment systems and market infrastructures were also adopted.
Strengthening the payment system through reforms in 2022, the BSP made significant strides in modernizing and improving the national retail payment system of the country.
The National Retail Payment System (NRPS) Framework, which was launched in 2015, laid down the regulatory foundations that are crucial in the transition to a cash-lite economy.
It paved the way for the creation of two automated clearing houses: the Philippine Electronic Fund Transfer System and Operations Network (PESONet) and InstaPay.
PESONet is a batch electronic funds transfer service that provides a viable alternative for checks and recurring payments. InstaPay is a real-time, low-value digital payments facility that substitutes for cash transactions.
PESONet transactions in April of 2018 reached 387,990 worth P62.1 billion and hit 7,779,099 as of end-December 2023 amounting to P758.1 billion.
In April of 2018, there were 1,740 transactions using InstaPay amounting to P0.02 billion.
As of end-December last year, 97,002,842 transactions were made amounting to P549.7 billion.
For the whole year 2023, fund transfers via PESONet and InstaPay jumped by 29.3 percent to P12.8 trillion from P9.9 trillion in 2022 while volume of transactions soared by 46.7 percent to 929.63 million from 633.49 million.
The BSP also established the Payments and Currency Management Sector (PCMS) in 2021.
The BSP, through the PCMS, pioneered innovative strategies in the digitalization of payments and accelerated the operationalization of the Digital Payments Transformation Roadmap (DPTR) for 2020-2023.
Under this three-year blueprint, the BSP aims to see half of the retail transactions in the country done electronically and at least 70 percent of Filipino adults owning transaction accounts, including e-wallets, by the end of 2023. The twin goals are well within reach.
Latest BSP data show that in 2021, about 30.3 percent of financial transactions were done electronically, and 56 percent of Filipino adults had transaction accounts, up from 14.0 percent and 29.0 percent, respectively.
The digitalization trend comes amid the BSP’s efforts to pursue a payments and settlements system that is efficient, safe, and inclusive.
On efficiency, the BSP has rolled out initiatives that make electronic fund transfers easy.
Aside from PESONet and InstaPay, BSP also created the digital payment streams EGov Pay and QR Ph. The EGov Pay is an electronic payment facility that allows individuals and businesses to digitally pay taxes, licenses, permits, and other obligations to the government. QR Ph, the national QR (quick response) code standard, provides an interoperable platform that allows QR-enabled fund transfers even if the sender and the recipient have accounts from different banks or e-wallets.
On safety, the BSP issued regulations and carried out campaigns that promote consumer protection and cybersecurity.
On inclusivity, the BSP, through its Financial Inclusion Office, has implemented policies and programs that made financial services more accessible to low-income earners and encouraged more people to open transaction accounts.
At the fore of these initiatives is the Paleng-QR Ph Plus program, under which the BSP partners with the Department of the Interior and Local Government to urge local governments to promote digital payments in local wet markets, public transport, and other retail establishments.
Under the Paleng-QR Ph program, LGUs are expected to issue an ordinance promoting cashless payments by mandating and incentivizing the use of QR Ph digital payments by market vendors and tricycle operators and drivers (TODA).
The Paleng-QR Ph program was formally launched in June 2022 with the BSP and the Department of the Interior and Local Government’s issuance of a joint memorandum circular enjoining all local government units (LGUs) to implement the program based on the guidelines provided. The program aims to promote financial inclusion and cashless transactions in public markets, community shops, and local transportation by capitalizing on the QR Ph initiative of the BSP.
Under the Paleng-QR Ph program, LGUs are expected to issue an ordinance promoting cashless payments by mandating and incentivizing the use of QR Ph digital payments by market vendors and tricycle operators and drivers (TODA).
The program also includes onboarding market vendors and transport providers to transaction accounts, which would not only provide them with the means to accept QR payments but also give them access to other financial services, such as formal credit.
As part of the program, financial education modules are likewise conducted for these target segments to enable them to maximize the use of their transaction accounts.
Another program component is the account opening day, which LGUs organize with the help of financial service providers participating in the QR Ph initiative.
In November 2022, the Paleng-QR Ph Plus program branding was introduced. The use of “Plus” aims to capture the broader target market of the program, expanding digital payment acceptance in every city and municipality in the country. It also better reflects the coverage of LGU ordinances to include other business establishments, which is in addition to market vendors and TODA.
A total of eight LGUs issued ordinances on the implementation of the Paleng-QR Ph program in 2022. These include the city governments of Baguio, Davao, Tagbilaran, Lapu-Lapu, Naga, Pasig, Antipolo, and Alaminos.
Six more LGUs rolled out the program through the issuance of ordinances on the Paleng-QR Ph program in 2023, particularly the cities of Ilagan, Bacolod, Angeles, and Iloilo; and the municipalities of Camiling in Tarlac and Carmona in Cavite.
As the speed and breadth of digitalization gain momentum, the BSP continues to pursue more innovative and inclusive strategies toward an efficient, safe, and inclusive payments and settlements system attuned to the evolving needs of Filipinos.
