By Imee Charlee C. Delavin, Reporter

National payments system in the works

Posted on October 13, 2015

THE FRAMEWORK for the envisioned national retail payments system (NRPS) could be ready by next month, a BancNet official said, in a bid to roll out the system by next year as the financial industry aims to have an integrated cashless network in the next three to five years.

The Bangko Sentral ng Pilipinas (BSP) last month said it aims to finish laying the foundation of the NRPS by yearend in partnership with banks, payments providers and telecommunication companies.

“We’re looking more at the framework and constitution of this national payments system. We’re targeting by November,” BancNet chairman and electronic channels group head at Bank of the Philippine Islands Manuel C. Tagaza said in a recent interview.

“There are a lot of activities now because the direction has been set.

We are now forming the constitution of what you call the payments system management board, so we’ll see a lot more developments.

What the BSP wants is to have a constitution where the organization is fixed already, so that’s what we’re working on. We meet almost every week now, with banks’ participation, telcos’ participation,” he added.

Deputy Governor Nestor A. Espenilla, Jr. earlier said the “idea is to be able to create an interoperable environment for the various kinds of e-payments systems -- cards, mobile, POS (point-of-sale) devices -- so that we’ll be able to transact down the road all the way to merchant establishments, even stores.”

For his part, Mr. Tagaza said: “We want the ability for anyone anywhere in the country to be able to pay anyone in the country, because right now funds transfer is not interoperable. Currently, it’s limited. What we hope is to have an inter-bank operability, but the goal is to go beyond banks to include electronic money issuers, to be able to interoperate with that.”

The official added: “Hopefully, BancNet will be the central operator for all these payments systems.”

The BSP and other stakeholders intend to have the system operational in about three to five years and at “least lay the critical foundation within the next two years.”

BSP Governor Amando M. Tetangco, Jr. said in July an NRPS would promote stability and inclusion in the financial system.

“Studies have shown that shifting from paper based to electronic-based payment system can generate an annual savings up to 1% of gross domestic product,” Mr. Tetangco said at the time.

Digitization of payments can also help expand financial inclusion in the country, he noted.

“Our National Baseline Survey in Financial Inclusion showed that only four out of 10 Filipino adults currently have savings, of whom only 32.7% put their money in banks. The survey also indicated that 47% of Filipinos have debts but banks contribute only 4.4% of their borrowings; the rest are from family, relatives, friends and informal lenders,” Mr. Tetangco said.

Citing studies conducted by the global public-private group Better Than Cash Alliance, Mr. Tetangco said that Filipinos make about 2.5 billion payment transactions per month worth $74 billion, but only 1% of these are transacted electronically.

“99% of the transactions are paid either in cash or checks. NRPS will allow us to start reversing this ratio. In other words, you have the option to have a bigger slice of this huge pie,” he said.

The central bank said in January it intends to roll out the system by next year.

During that time, the BSP announced the signing of a memorandum of agreement for the consolidation of BancNet, Megalink and Expressnet has been signed to unify the country’s automated teller machine (ATM) networks, with BancNet as the surviving entity.

Officials said it will take around a year before the consolidated system is fully in place.

BancNet was the first ATM consortium to operate in the Philippines, starting with eight member banks. Today, BancNet is comprised of 34 of the country’s largest banks.

In 2010, the country’s three ATM networks interconnected their points-of-sales, allowing card holders of their member banks to make debits anywhere.