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Manila Bulletin devider Business devider Banking & Finance devider BSP extends compliance to new electronic fund transfer rules

BSP extends compliance to new electronic fund transfer rules

Published Dec 30, 2024 05:10 am

The Bangko Sentral ng Pilipinas (BSP) is giving banks and non-banks three more months to transition and to comply with the new regulation for consumer redress mechanism standards for account-to-account electronic fund transfers (EFT) under the National Retail Payment System (NRPS) Framework.

BSP Governor Eli M. Remolona Jr. said in Memorandum No. M-2024-045 that all BSP supervised institutions (BSIs) that are direct clearing participants of automated clearing houses (ACHs) InstaPay and PESONet as well as clearing switch operators (CSOs) will have an extended compliance period of until March 31, 2025, to adopt the new guidelines as specified under Circular No. 1195. The previous transition deadline was Dec. 31, 2024.

“The BSP remains committed to supporting the payments industry throughout this transition,” said Remolona in the memo that he signed on Dec. 27.

The BSP released Circular No. 1195 last June which outlines the consumer redress mechanism standards for EFTs. The central bank issued the guidelines to encourage the growth in the use of the digital payment system by ensuring consumers will be adequately protected.

The BSP approved the circular to ensure that BSIs with EFTs via InstaPay and PESONet will have the ability to provide appropriate and timely consumer recourse mechanisms on issues lodged by consumers.  

Meanwhile, the additional time for the transitory provision should allow CSOs and ACH participants to develop the necessary resources to comply with the new regulation.

The BSP said previously that the new circular aims to build trust and confidence in using digital payments. It will provide timely consumer recourse mechanisms and define industry-wide actions and expectations on CSOs.

As defined by the BSP, CSOs refer to the party designated to provide clearing switch services by acting as the operator of the payment system to be used by the ACH participants.

EFTs, on the other hand, are synonymous with electronic payment and are the transfer of funds between two transaction accounts in the same or different BSIs, which are initiated and received using electronic devices and channels to transmit payment instructions, said the BSP.

The new regulation will apply to all CSOs and ACH participants providing domestic account-to-account EFTs. This includes Person-to-Person (P2P), Person-to-Merchant (P2M), and Person-to-Biller (P2B) payments as per the ACH clearing rules.

There are minimum requirements to implement provisions of the circular, such as notification on EFTs, return of funds, collection and return of EFT fees, disruption of services and operations, and consumer protection.

Within the transitory period, the BSP expects participants will coordinate with their respective players, the Philippine Payments Management Inc., as well as to work on the issuance of the revised ACH operating guidelines.

In 2022, the BSP approved new rules to protect the interest of consumers of financial products and services through the effective handling of complaints and disputes through Circular No. 1160, another provision of Republic Act No. 11765 or the “Financial Products and Services Consumer Protection Act” (FCP Act).

The significance of the pro-consumer law, besides BSP improving its complaints handling mechanism, is that its consumer redress includes the central bank’s capability to adjudicate or pronounce judgment in connection with financial transactions. With this power, the BSP can order the reimbursement of a sum of money not exceeding P10 million.

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