To ensure the growing e-payment users have more confidence in the digital transaction system, the Bangko Sentral ng Pilipinas (BSP) has approved a new set of rules to enhance settlement of e-payments via InstaPay and PESONet.

According to the BSP on Wednesday, July 31, BSP Circular No. 1196, or the “Amendments to the Guidelines on the Settlement of Electronic Payments Under the National Retail Payment System (NRPS) Framework” which was approved last June 27, enables the BSP to scrutinize e-payment settlements more closely.

“(The circular) ensures that all enhancements to the settlement guidelines of ACHs (automated clearing houses) are thoroughly reviewed and approved by BSP prior to implementation,” said the BSP. InstaPay and PESONet are ACHs created under the NRPS.

The BSP also noted that the approved guidelines are “part of ongoing efforts to ensure integrity and efficiency of the payment system.”

The revised guidelines provide operational flexibility to InstaPay which is a real-time, low-value digital payments facility serving as a substitute for cash transactions; and PESONet, a batch electronic funds transfer service that is a viable alternative for checks and recurring payments.

Since the guidelines enable the BSP to review all ACH implementation, the new circular requires prior BSP approval for new rules or enhancements to the settlement of e-payments under the Manual of Regulations for Payment Systems (MORPS).

“Under the policy, ACHs may now lodge requests with the BSP when they deem that adjustments are necessary to enable more settlement cycles, support faster settlement, and improve the overall efficiency of e-payments,” said the BSP.

For instance, subject to BSP approval, an ACH may recommend the use of a particular demand deposit account (DDA) maintained with the BSP when settling e-payments, instead of separate DDAs. This can be requested in view of evolving circumstances, or when there are new use cases, explained the BSP.

The BSP also reiterated Wednesday that with the Philippine Payments Management Inc. (PPMI) and the PESONet Steering Committee, they have activated the third settlement cycle for PESONet transactions last July 8, 2024.

The PESONet’s Multiple Batch Settlement (MBS) facility has commenced a mid-day settlement that increased its batch settlements to three cycles per banking day, said the BSP. It noted that “the new cycle adds to the earlier two settlements that are carried out in the morning and at the end of a banking day.”

The PESONet MBS or 3MBS has shortened the clearing intervals within a banking day. It also improved user experience “by enabling faster crediting of funds to recipients’ accounts, and facilitates easier cash flow management for businesses.”

In addition, PESONet participating banks and e-money issuers were better able to manage settlement risks because settlement of PESONet transactions are now divided among three batches in a banking day, said the BSP.

Last July 23, the BSP reported that as of end-2023, 52.8 percent of total retail transaction volume in the Philippines have migrated to e-payments. This surpassed the original target of 50 percent based on the BSP’s Digital Payments Transformation Roadmap.

The e-payments transactions of 52.8 percent of all retail payments was higher than end-2022’s 42.1 percent.

In 2023, the share of digital payments to total retail payments was equivalent to 2.62 billion monthly payment transactions made digitally. This translates value-wise to $110 billion or P6.1 trillion.

After achieving the 50 percent target of e-payment migration, the next target is to achieve a 60 percent to 70 percent share of digital payments over total retail transaction volume by 2028.