The Bangko Sentral ng Pilipinas (BSP) and the Cooperative Development Authority (CDA) agreed to work more closely to strengthen the supervision of cooperatives with digital payment operations.
“This collaboration is crucial in developing a comprehensive regulatory framework that considers the unique challenges and opportunities authorities face,” said BSP Governor Eli M. Remolona Jr. on Monday, Oct. 23.
He added that the closer collaboration should “result in regulations that are proportionate, relevant, and future-proof.”
“The approach will also avoid regulatory arbitrage and enhance the transparency and accountability of the cooperative sector,” said Remolona.
After last week’s signing of the memorandum of agreement (MOA), the two agencies forged a cooperative oversight arrangement to supervise cooperatives with electronic money or e-money operations.
The MOA sets out the arrangement between the BSP and CDA for the concurrent oversight and regulatory approach as well as the exchange of information to facilitate discharge of their respective mandates.
The BSP is hoping that the agreement will foster a stronger inclusive digital payment ecosystem with the enhanced oversight.
Basically, the MOA signed last Oct. 18 will define more clearly the oversight and supervision of cooperatives that are e-money issuers and operators of payment systems, including those that deploy ATMs, said the BSP.
The BSP is mandated under the National Payment Systems (NPS) Act to exercise oversight over NPS, which includes the covered cooperatives.
“The cooperative oversight initiative provides coordination between the BSP and government agencies to avoid gaps, inefficiencies, duplication, and inconsistencies in regulations,” said the BSP.
In addition, the central bank said the onboarding of cooperatives in NPS will support the digital payments transformation program of the government, as well as the National Strategy for Financial Inclusion.
Based on the latest data, financial cooperatives are present in 212 or 13 percent of unbanked municipalities.
The Philippines has an expanding digital payment transactions.
As of end-2022, BSP numbers showed that about 42.1 percent of payment transactions have shifted to e-payments. This was higher compared to 30.3 percent in 2021.
Under the BSP’s Digital Payments Transformation Roadmap, 50 percent of payments in terms of volume should be digitalized by end-2023.
The share of digital transactions in total payments has been growing steadily with both InstaPay and PESONet. Also, more people are using the QR Ph code for payments while all payment service providers still using non-QR PH codes will shift to QR Ph this month.
The BSP was able to migrate more transactions into digital form because of merchant payments, peer-to-peer (P2P) remittances, and business payments of salaries and wages to employees. All of these payment streams are high-frequency and low value retail transactions.
The report on the BSP’s 2022 Status of Digital Payments showed merchant payments continue to lead in the digital payments usage. It increased by 35.6 percent year-on-year. From 1.112 billion transactions in 2021, electronic payments to merchants have reached 1.507 billion in 2022.
Meanwhile, P2P transfers rose by 91.2 percent last year to 299.7 million transactions from 156.7 million in 2021.