One-day check clearing starts in January

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) said the number of days in the clearing of checks would be reduced to one day from the current three starting January 2017.

BSP Governor Amando Tetangco Jr. yesterday signed a memorandum of agreement with Philippine Clearing House Corp. (PCHC) president and CEO Emmanuel Barcena to operationalize the Check Image Clearing System (CICS).

“Through CICS of the PCHC, all of our checks are targeted to be cleared in a fully electronic environment starting January 6 next year. For those of us who really are not specialists in this area, if there is one take away from this development, it has to be the fact that funds will now be made available by next day at the latest,” Tetangco said.

Tetangco said checks issued to family, friends, and business partners in various parts of the country would now enjoy near real-time finality of payment.

“And since check data are transmitted electronically, we necessarily eliminate transport risks on the physical cheques. We likewise address consumer protection issues that arise when our checks are either pilfered and/or altered to benefit those with ill-motives,” Tetangco said.

According to Tetangco, it is important to strengthen the check clearing system by leveraging on the advantages that technology provides.

“We are establishing the critical foundation for the adoption of check truncation technology. Simply put, we are moving from physical clearing of paper checks to a system that digitizes those same paper checks to facilitate their electronic clearing,” he said.

Data showed PCHC processes about 700,000 checks every day with an average value of P135 billion.

Tetangco said payments and settlement infrastructure plays a critical role in a dynamic and growing economy.

He cited a study by the Better than Cash Alliance in 2014 that showed only one percent of the monthly retail transactions are done in electronic form.

“This validates our heavy reliance on cash and checks in conducting our business. At a time when technology has become scalable, portable and affordable, this apparent reluctance to parlay the benefits of technology can only translate to further inefficiencies via foregone opportunities,” he added.