BSP backs integrated bills payment facility

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is pushing for the creation of an integrated bills payment facility as it continues to ramp up efforts to transform the Philippines  from a cash-heavy to a cash-lite economy.

BSP Governor Benjamin Diokno told members of the Philippine Payments Management Inc. (PPMI) during their annual membership meeting that the creation of an integrated bills payment facility would eliminate inefficiencies in the bills collection process.

Diokno said the initiative aims to make the bills collection process more efficient by ensuring a biller could collect from its customers without requiring both parties to transact through a common payment service provider.

“This inefficiency calls for the establishment of an integrated bills pay facility, where a biller can collect from the payers even if the payment service providers of the payers are different from that of the biller,” Diokno said.

Under the current set up, the country has a fragmented bills payment mechanism where a biller typically must make a bilateral arrangement with a payment service provider if the biller wants to electronically collect from the clients of the said payment service provider.

In a separate speech during an event organized by Citibank, Diokno said the BSP is also pursuing a direct debit arrangement, which would enhance customers’ management of recurring payments such as monthly rents by simply authorizing the payees to withdraw funds directly from the accounts of the payors.

“This is of great help to customers who, currently, have no choice but to bear the cumbersome process of issuing numerous checks covering their recurring payments such as monthly rental, insurance premium and other fixed installments,” he said.

On the part of the payees, the arrangement would enable them to streamline collection efforts and realize expected cash inflows on time.

Diokno said the BSP is working closely with the PPMI to reduce the cost of doing digital payments to encourage consumers to shift from cash-based to digital transactions.

A number of banks have agreed to waive the fees for fund transfers via the PESONet and InstaPay facilities until the end of the year to minimize face-to-face transactions and ease the burden of clients affected by the COVID-19 pandemic.

PESONet and InstaPay transactions, more than doubled in both volume and value between July 2019 and July this year as the country imposed one of the longest and strictest lockdowns to slow the spread of COVID-19.

Likewise, the volume of digital government collections and disbursements through the electronic government (E-Gov) pay facility surged by 688 percent, while value jumped by 799 percent since it was launched in November last year.

The BSP is also looking at launching the person-to-merchant quick response (QR) code payment in the near term as person-to-person transactions via QR codes continue to surge.

The BSP targets to raise the number of digital transactions in the country to half of total transactions by 2023 from only one percent in 2013.

The central bank launched the National Retail Payments System (NRPS) in December 2015 to increase the share of electronic payments to 20 percent by 2020.

Latest data from the Better Than Cash Alliance (BTCA) showed that the volume of e-payments in the county increased to 10 percent in 2018 from only one percent in 2013, while the share of the value jumped to 20 percent from  only eight percent.