The number of banks offering deposit products for micro, small and medium enterprises (MSMEs) such as basic deposit accounts or BDAs have grown from just 121 in 2020 to 158 banks with BDAs as of end-March this year.

First introduced in 2018, BDAs are low-cost, no-frills account with an initial deposit of just P100 or less. It also has no maintaining balance, no dormancy charges, and requires only simple identification for account opening.

The Bangko Sentral ng Pilipinas (BSP) on Friday, Sept. 1, said the number of BDA holders have also grown to 21.9 million in the first quarter this year compared to 8.1 million same period in 2022. The five additional banks that have BDAs during the quarter alone generated some 4.3 million new opened accounts.

In value terms, BDA deposits totaled P27 billion, a huge increase of 432 percent from P5.1 billion in the same period last year.

According to the BSP, BDA transactions increased because of accounts opened under the Philippine Identification System (PhilSys). The co-location strategy by the Philippine Statistics Authority and state-owned Land Bank of the Philippines raised an additional 7.5 million BDAs during the first three months of 2023.

“(The) co-location strategy aims to onboard unbanked PhilSys registrants into the formal financial system after their biometrics capture at registration centers,” said the BSP.

Meanwhile, at the end of 2022 the BSP drafted proposed rules on the basic merchant account (BMA) framework that will specifically cater to ambulant vendors and convenient stores.

BMAs are basically accounts that will allow MSMEs to accept digital person-to-merchant and business-to-business payments. This will be offered by all banks, bank-owned e-money issuers (EMI) and non-bank EMIs.

BMAs are specifically designed for ambulant vendors or street hawkers who travels – whether on foot or on tricycles or bicycles – to sell their goods. But it also includes gasoline stations and restaurants, among others.

The BSP in the proposed circular said the objective is to expand the inclusive financial system and to “promote broad adoption of digital payment among consumers and businesses given its welfare-enhancing benefits for its users and the country.

The BMAs will encourage the uptake of merchant accounts to enable seamless payments. It is designed for the small and micro merchants “who may have limited resources and capabilities to open a regular merchant account for their enterprise,” said the BSP.

Banks with BMA products will have regulatory incentives. Banks with BMA e-money accounts of at least 5,000 to 100,000 will have a 10 percent or P10 million whichever is lower discount on their annual supervisory fees. If they have more than 100,000, the discount is 25 percent or P15 million whichever is lower.

As for BDAs, banks have introduced different versions of BDAs, depending on how they want to grow their market. Most banks have apps designed for MSMEs.