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National Retail Payment System and Proposed Payment Systems Act

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Presented last March 14, 2016 at the Bangko Sentral ng Pilipinas to e-commerce industry players in the Philippines.

Published in: Government & Nonprofit
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National Retail Payment System and Proposed Payment Systems Act

  1. 1. NATIONAL RETAIL PAYMENT SYSTEM & Proposed Payment Systems Act (House Bill No. 6197 & Senate Bill No. 3207) Presentation to Payment Providers and other Stakeholders The Lounge, BSP Executive Business Center BSP Complex, Mabini, Manila 14 March 2016
  2. 2. I. National Retail Payment System (NRPS) A. Rationale B. What is NRPS and its Objectives C. NRPS Vision II. The Proposed Payment System Act (PSA) A. Policy Objectives B. Salient Features AGENDA
  3. 3. I. NRPS(National Retail Payment System)
  4. 4. 36% of the 1,634 cities and municipalities do not have a banking office With at least one banking office Unbanked archipelagic barriers pose a big challenge to financial access of adults have an account at a formal financial institution 31.3% of adults had a loan in a formal financial institution in the past year 11.8% 42% 68% of the total number of deposit accounts of the total amount of deposits are concentrated in NCR A. Rationale – Financial Access
  5. 5. • Of the 2.5 billion monthly transactions (volume) only 1% are electronic payments (BTCA) • Only 30% have bank account, 3% with credit card and 13% a debit card (World Bank) • Maintain multiple accounts with several banks • Overwhelming use of checks and deployment of manual processes to pay suppliers/creditors • Small but formal businesses are not able to use checks • Key barrier for electronic payments - limited level of financial inclusion, intertwined with the sheer size of the informal sector A. Rationale – Current Situation
  6. 6. 2.5 Bn monthly transactions only 1% are made via electronic means * • ATMs used mainly for cash withdrawals • Mobile money served as cash servicing through agents Limited interoperability among Payment Service Providers • Limited interbank fund transfer • High cost of moving funds • Slow flow of funds • Lower productivity Electronic access to Interbank Fund Transfer facility is not generally available A. Rationale - Challenges * BTCA study 2013/2014 Low adoption of e-payments B2B, B2G, B2P P2B, P2G, P2P
  7. 7. NRPS A policy and regulatory framework which aims to establish a safe, efficient, reliable and affordable retail payment system in the Philippines * Enables effective and efficient interface and interoperability among players * Fosters innovation and new business models * Facilitates the provision of a wide range of products and services with needed certainty, affordability and trust *Ensures transparency B. The National Retail Payment System (NRPS)
  8. 8. Goods and Services Remittances Debits and Other Credits Proceeds of Loans and Investments (interests) Bills Payments Taxes and Licenses Electronic Fund Transfers Salaries, Allowances, Commissions -11h -10h -09h -08h -07h -06h -05h -04h -03h -02h - +01h +02h +03h +04h +05h +06h +07h +08h +09h +10h + NRPS C. NRPS Vision
  9. 9. Current E-Payment System
  10. 10. CLEARING 1 Instruct to pay merchant/recipient, net of tax 2 Forward instruction SENDING INSTITUTION SENDER 6 Settlement 3 Route message to Receiving FI 4 Credit to account 5 Submit net clearing results for settlement RECEIVING INSTITUTION RECIPIENT 6 Settlement BSP Settlement C. NRPS Vision – Electronic Payment
  11. 11. 1 FI credits Account of Client 2 Client has option to pay for goods electronically via any digital device 3 Client instructs his/her bank to pay Merchant 6 Merchant releases goods to Client 4 Client’s bank transfers fund to Merchant’s bank account 5 Bank notifies Merchant that account was credited E Merchant instructs bank to pay amount to Distributor’s bank A. Shop orders supplies from Distributor B. Distributor sends Sales Invoice to Merchant F Merchant’s bank transfers fund to Distributor’s bank account G Bank notifies Distributor that account was credited C. NRPS Vision – Increase Access to Finance Client Merchant Distributor
  12. 12. II. Proposed PSA (Proposed Payment Systems Act)  House Bill No. 6197 - Sponsor: Rep. Sonny Collantes - Passed Third Reading (Sixteenth Congress)  Senate Bill No. 3207 - Sponsor: Sen. Bam Aquino - Pending at the Senate Committee level
  13. 13. Policy Objectives Safe, efficient and reliable payment systems Stability and effectiveness of monetary and financial system Control systemic risk Sustainable economic growth
  14. 14. Salient features Roles of BSP Oversight Supervision and Regulation Enforcement Designation of payment systems Criteria Effects Payment System Management Body Members = participants Self-regulating Enforce rules Operations of payment systems Responsibilities of participants Finality and Netting
  15. 15. Q & A

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