The Bangko Sentral ng Pilipinas (BSP) has approved the regulatory framework for merchant payment acceptance activities (MPAA) to widen the use of digital payments in the country.
Merchants refer to physical or electronic retailers, service providers, billers and businesses that accept payments for goods and services.
Based on the new BSP Circular No. 1199, approved on July 19, it defines a merchant as an end-user that avails of MPAA.
MPAA is a set of services provided to a merchant to receive payment for the sale of goods and services. The activity also includes merchant acquisition services, which are the processing of payment transactions and the transfer of funds to the merchant.
In approving the new circular, the BSP is enabling merchants to accept different forms of payments for the sale of goods and services “in a safe and efficient manner is vital in facilitating the smooth flow of funds in the economy and contributing to the wider adoption of digital payments in the country.”
The BSP said that for digital payments to thrive, the minimum standards and good practices as established in the circular should be able to safeguard the funds received from customers of merchants and protect the rights and interests of end-users that deal with operators of payment systems (OPS) that engage in MPAA.
An OPS is “any person who provides clearing or settlement services in a payment system, or defines, prescribes, designs, controls, or maintains the operational framework for the system.” This typically involves business organizations such as sole proprietorships, partnerships, cooperatives, or corporations.
The new framework specifically ensures that OPS engaging in MPAA will adopt governance structures and appropriate measures to manage risks such as those related to settlement, operations, information technology, anti-money laundering countering terrorism and proliferation financing, and end-user protection.
The circular covers the following: the granting of a license to conduct MPAA; capital requirement; governance; AML/CTPF requirements; merchant onboarding/monitoring/dispute resolution; end-user protection; information technology risk management; pricing mechanism; outsourcing; reportorial requirements; and enforcement action.
The BSP requires a merchant acquisition license or MAL and capital for merchant acquisition services and this will depend on the size. A merchant acquirer directly or indirectly enables a merchant to accept various payment instruments through its merchant payment acceptance services.
An OPS with MPAA transacting less than P100 million in an applicable period will be required to have a minimum capital of P5 million. If the funds transferred to merchants are P100 million and above, the required minimum capital is P10 million.
License fees, meanwhile, will range from P25,000 to P60,000.
Entities that have secured an OPS-MAL will be considered compliant with the registration requirements as an OPS.
The circular covers BSP-supervised financial institutions or BSFls such as banks and electronic money issuers-non bank financial institutions or EMI-NBFIs.