Gov’t e-payments should erode graft, corruption – BSP

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Tuesday, May 17, that the issuance of Executive Order (EO) No. 170 to expand government’s e-payment transactions will be effective against graft and corruption.

The EO, signed on May 12, ordered the adoption of digital payments for government disbursements and collections. The EO also allows government entities to include in their respective budgets a reasonable amount for the establishment and maintenance of required infrastructure and the system for digital payments, said Diokno.

BSP Governor Benjamin E. Diokno

“Digital collection of payments will expedite transactions, generate savings for the government and the public, and reduce the risk of graft and corruption," said the BSP chief.

Diokno also said that it will provide “robust support to BSP’s efforts in promoting payments digitalization and financial inclusion” under the Digital Payments Transformation Roadmap (DPTR) and the National Strategy for Financial Inclusion (NSFI).

The BSP’s DPTR aims to migrate at least 50 percent of all retail payments into digital form by next year, as well as the onboarding of 70 percent of Filipino adults to the formal financial system. By end-2020, the share of digital payments to total financial transactions have increased to 20.1 percent from 14 percent in 2019 and only one percent in 2013 before the DPTR. About 53 percent of Filipino adults have been onboarded as of the first quarter of 2021 from just 29 percent in 2019.

The new EO mandates all departments, agencies, and instrumentalities of the government, including state universities and colleges and government-owned or -controlled corporations, and enjoins local government units to utilize digital channels in the disbursement and collection of payments, said the BSP.

For all disbursements including the distribution of financial assistance among others, the EO requires government entities to transfer funds directly into the recipient’s transaction account, whether held in a government or private financial institution, it added.

“The EO also requires government agencies to offer digital options for the collection of taxes, fees, tolls, and other government payables. The public, however, may still transact with the government through cash payment,” noted the BSP.

For this year, the BSP will launch three e-payment streams which are Bills Payment, Request-to-Pay and Direct Debit.

The interoperable Bills Payment and Request-to-Pay facilities will run through InstaPay while the Direct Debit is via PESONet.

The Request-to-Pay facility allows payers to effectively manage recurring, non-urgent bills such as rents, loan amortizations and insurance premiums. The PESONet has recently adopted a multiple batch settlement or MBS scheme.

The Bills Payment facility, meantime, allows customers to pay their bills even if the transaction accounts of the customer and the biller are in different payment service providers. The facility will enable a more efficient collection among billers.

As for Direct Debit, customers can better manage their recurring payments such as monthly rentals by simply authorizing the payees to pull funds from the account of the payors.

The NSFI, meantime, is the country’s blueprint to achieve financial resilience for every Filipino.

The BSP has recently updated the NSFI objectives for another six years to focus more on the micro, small and medium enterprises (MSMEs), start-ups, and agriculture financing. The MSME sector with 63 percent of total employment is a major source of livelihood for a large population of Filipinos.

Led by the BSP, the government launched a refreshed 2022-2028 NSFI in January, which is a crucial, pandemic-proof update of the previous 2015 NSFI.

The updated NSFI’s primary objective is financial resilience since many Filipinos, especially the poor, are facing increased vulnerabilities from the health crisis and climate change.

Financial resilience, as defined by the BSP, “refers to the ability of individuals and households to reduce and mitigate risks, as well as cope with and recover from various shocks to minimize impact on their long-term financial well- being.”