To prevent its misuse, the Bangko Sentral ng Pilipinas (BSP) is extending until December 2024 the ban on the granting of licenses to new e-money issuers (EMIs) to give it more time to assess the digital money market but it is retaining the window for approved exemptions, it announced via a memo on Wednesday, Dec. 13.
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 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.
BSP Deputy Governor Mamerto E. Tangonan in a memo (BSP Memorandum No. 2023-035) said all non-bank financial institutions (NBFIs) applying for an authority to operate as an EMI can only enter the market after Dec. 15, 2024, because the moratorium on new EMI entry has been extended for another year.
“The Monetary Board, in its Resolution No. 1598 dated 07 December 2023, approved the extension for another year or until 15 December 2024, the moratorium on the regular application for new Electronic Money lssuers Non-Bank Financial Institutions (EMl-NBFI) which exception may be granted for application under the conditions” set forth in a previous memo, or Memorandum No. M-2021-064, said Tangonan.
The BSP is retaining its selective approval of new licenses if it falls under these exemptions: new business models; unserved, targeted niches; and/or new technologies to be processed through the regulatory sandbox approach.
“These exceptions are intended to modify the current landscape in the e-money industry with new business models and new technologies shifting the focus to unserved and underserved markets,” said Tangonan.
The BSP official said any EMI-NBFI applicants that meet any of the required exemptions and “offer strong value propositions” to provide EMI services may apply through the regulatory sandbox framework under BSP Circular No. 1153.
The BSP first imposed the moratorium on December 2021 and it was intended only to last for two years which was enough time for BSP to study on how to selectively lift the ban to “keep out the bad guys.” However the BSP deemed it necessary to impose the moratorium for another year.
The central bank closed the EMI application window for both banks and non-banks to allow the BSP to monitor the EMI sector and to ensure financial stability.
Earlier this year, 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 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 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 71 registered and licensed EMI-Banks and EMI-NBFIs.
Of the 71 EMIs, 28 are EMI-Banks or owned by banks while 43 are EMI-NBFIs or owned by non-banks such GCash, PayMaya and GrabPay.