The Bangko Sentral ng Pilipinas (BSP) is currently evaluating and assessing if it could lift the two-year moratorium on the issuance of electronic money issuers (EMI) licenses earlier than planned.
The ban on EMI applications from both non-bank and bank-owned EMIs was imposed on Dec. 16, 2021 and will last until mid-December 2023. The purpose of the moratorium is to allow the BSP to monitor the EMI sector and to prevent the misuse of e-money licenses.
BSP Deputy Governor Chuchi G. Fonacier said they have not yet reached any decision on how to go about the selective lifting of the temporary suspension of the granting of new EMI licenses.
“No decision yet at this point,” she said in a text message. “We’re still assessing,” added Fonacier.
Last November 2022, BSP Governor Felipe M. Medalla said they will study the selective lifting of the moratorium.
The BSP has two other options, either remove the ban before December this year, or to extend the moratorium beyond two years to effectively weed out the “scammers” and “keep the bad guys out” with Medalla calling out some of the EMI applicants who apparently only applied to sell the license to someone else.
Last week, the BSP issued a new EMI circular which raised the required minimum capital for an e-money firm with a 12-month large-scale operations of P25 billion or more. The minimum capital for these operations is now P200 million from the previous P100 million. Meanwhile, the minimum capital requirement for small-scale EMIs is P100 million.
All banks and non-bank financial institutions or NBFIs have one year to comply with the revised rules. EMIs also have new classifications as EMI-Banks and EMI-NBFIs which used to be EMI-Others.
Circular No. 1166, issued on Feb. 7, is deemed more “responsive and effective” in the management of attendant risks of e-money transactions such as cybersecurity and money laundering.
The BSP defines e-money as electronically-stored cash in an instrument or device such as cash cards, prepaid cards, stored value cards, or any digital wallet accessible via mobile phones or other access device, and other similar products within the scope of electronic payments. All e-money accounts are non-interest-bearing and non-deposit transaction, and pre-funded by customers.
The revised guidelines updated the previous circular by expanding the definition of EMIs, and taking into consideration recent advances in digital technologies. In addition, to further protect e-money account holders, the circular imposed higher liquidity and capital requirements for EMIs.
The BSP is currently supervising 70 registered and licensed EMI-Banks and EMI-NBFIs. Of the 70 EMIs, 29 are EMI-Banks or owned by banks while 41 are EMI-NBFIs or owned by non-banks such GCash, PayMaya and GrabPay.
Based on the BSP’s 2021 Financial Inclusion Survey (FIS), from 2019 to 2021, financial account ownership in the country grew from 29 percent to 56 percent of adult population.
The 56 percent is equivalent to 42.9 million of Filipino adults with transactional accounts. About 77.2 million of the total 110 million Filipinos are adults.
Ownership of a formal account is a basic indicator of financial inclusion and this expanded due to increased use of digital payments during the Covid-19 pandemic.
Account ownership significantly grew partly because of e-money accounts, which climbed to 36 percent in 2021 from eight percent in 2019. This became the most common type of account among adults in the middle class and low-income population, as well as with those aged 15 to 49 years old.
As of end-2021, there are 27.5 million Filipinos with e-money accounts compared to 5.7 million in 2019.