The Bangko Sentral ng Pilipinas (BSP) does not expect paper-based or written cheques to totally disappear in the country despite a more convenient digital alternative to high-value transactions, according to BSP Governor Benjamin E. Diokno.
“At least not within the next three years,” said Diokno during the launch of the PESONet Multi Batch Settlement or MBS on Monday, Jan. 24.
“While PESONet was designed as an alternative to the paper-based cheques, it is not intended to eliminate the use of this conventional way of making high-value payments,” he said.
“While we encourage corporate clients and other users to veer away from paper-based cheques and use the more convenient digital payment options, some businesses may still opt to use cheques for their collections. For instance, real estate developers still require their perspective buyers to issue post-dated cheques or PDCs for future payments particularly those under pre-selling stage wherein monthly PDCs are required to finance part of the equity and the property. These (PDCs) usually range from six months to as long as 60 months or five years,” said Diokno.
The BSP on Monday started the PESONet-MBS payment trails and they expect it to accelerate the digitalization of more payment transactions this year. Even as they expect more financial transactions to migrate to PESONet, the Philippines may still have a need for paper-based cheques unlike other countries that have totally done away with written cheques.
PESONet-MBS is a more frequent settlement of fund transfers since it allows two cycles within a banking day instead of the previous one cycle. “PESONet recipients will now be able to receive funds at an earlier time than the usual end of banking day. With this enhanced feature, we hope that consumers will be incentivized to use PESONet for greater convenience, faster settlement and better liquidity management,” said Diokno.
BSP Deputy Governor Mamerto E. Tangonan said that with the MBS, they could expect to drive up the volume and value of PESONet transactions.
Tangonan said that on Monday morning, with the first successful batch of PESONet-MBS transactions to the BSP-run PhilPaSSplus, about 99,000 transactions were recorded amounting to over P8 billion. He said these figures are already equivalent to 1.6 percent and 2.2 percent of the average monthly volume and value of PESONet transactions in 2021. The MBS will have a morning and end-of-day settlement cycles in response to the demand for shorter clearing intervals.
Last year, Tangonan said the average monthly PESONet transfers amounted to P380 billion. “Based on our projections, this figure could increase by more than 50 percent as we implement the MBS in the next 24 months,” he said. “In addition to offering two settlement cycles in a day, other factors such as growing numbers of participating institutions are expected to sustain the upward trend of PESONet use,” he added.
As of end-December 2021, there are 94 BSP supervised financial institutions in PESONet. These are big banks, thrift and rural banks, as well as e-money issuers.
By end-2021, PESONet volume grew by 26 percent to seven million transactions compared to 5.5 million in 2020. In terms of value, transactions increased by 37 percent to P502 billion from P366 billion in 2020.
For InstaPay, the volume of transactions went up by 47 percent to 45 million versus 36.4 million in 2020, while the value of transfers surged by 64 percent to P289 billion by end-2021 compared to P176.5 billion in 2020.
It was both the BSP and Philippine Payments Management Inc. (PPMI) that hosted the launch of PESONet MBS on Monday.
“With PESONet-MBS, businesses can manage their cashflows better,” said Diokno. “A business can ensure timely crediting of payroll funds since PESONet MBS allows the transfer of funds and the receipt of the same by employees within the same banking day. (And) since funds are made available earlier, PESONet MBS can cut production cycle time that boosts economic productivity,” he added.
Diokno also said that with a more frequent settlement cycles, person-to-government payments via EGov Pay which is an online facility that allows citizens to pay taxes and other fees due to government institutions, including permits and fees, will improve.
In 2021, the value of Social Security System disbursements for example, that went through PESONet, reached P158.47 billion. “There is room for further growth with the launch of these digital initiatives,” said Diokno.