A draft Circular has been released by the Bangko Sentral ng Pilipinas (BSP) that provides for the implementing rules and regulations (IRR) of Republic Act (RA) No. 11127 or the National Payment Systems Act, according to a recent report.
This is the landmark legislation that supports the performance of the central bank in its mandate relating to the third pillar of central banking, which is the maintenance of a safe, efficient, and reliable payments system.
What is the Act?
RA No. 11127 is the first comprehensive legal and regulatory framework governing the payment systems in the Philippines.
It can support the twin objectives of one, maintaining a payment system that is necessary to control systemic risk and two, providing an environment conducive to the sustainable growth of the economy.
It creates a safe, efficient and reliable payment system through which funds are transferred among banks and other institutions in order to discharge payment obligations that arise from economic and financial transactions across the entire economy.
It thereby reduces the cost of exchanging goods and services.
Moreover, it serves as an essential tool for the effective implementation of monetary policy and the smooth functioning of money and capital markets.
What does the Act entail?
The scope of the regulatory powers of the central bank is expanded under the Act in order to cover the non-financial institutions such as operators and their service providers, to name a few.
This is being done since the usage of payment systems is not necessarily limited to banks and non-bank financial institutions.
The first phase of the phased in implementation of the Law prioritises the creation of a baseline inventory of all operators of payment systems (OPS). The draft Circular falls under this phase.
First Phase
A baseline inventory is required under Section 10, which provides that all OPS shall register with the central bank.
This inventory will also be used as inputs to the specific criteria for designating payment systems. Plus, it will be used as inputs to the oversight rules that will be applied to such systems and the participants.
Furthermore, the draft provides examples, though not exhaustive, of activities that will sufficiently guide the stakeholders on which persons are required to register with the central bank as OPS.
The draft contains a simplified registration process and streamlined documentary requirements.
For those institutions that are already registered and licensed by the central bank, they only need to submit a duly accomplished application for registration.
To ensure the smooth transition of the OPS that exists at the time of the law’s effectivity, the draft provides a transitory provision that allows said OPS to register within a reasonable period.
