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Tuesday, March 5, 2024

BSP to boost digital payments adoption toward a ‘New Economy’

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Under its vision of a “New Economy,” the Bangko Sentral ng Pilipinas (BSP) is determined to advance the digital transformation of the country’s financial services. 

This transformation aims to achieve economic growth and provide opportunities for every Filipino to participate in the formal financial system through easier access to a wider range of financial services.

In line with this vision and its stated objectives and strategies under the Digital Payment Transformation Roadmap (DPTR) for 2020-2023, the BSP continues to develop a digital payments ecosystem that targets current consumer and business needs to boost digital payments. 

Underpinning these are the results of the Better Than Cash Alliance (BTCA) Diagnostic on the Philippines which identified payments-to-business (P2B) transactions as the most viable case that would boost uptake of digital payments.

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The BSP will introduce several digital payments streams, including the multi-batch settlement for PESONet, interoperable bills payment facility, request to pay service, and the direct debit use case. These will provide value propositions for the adoption of digital payments in P2B transactions and make them more efficient.

The multiple batch settlement scheme for PESONet will increase settlement frequency within a banking day. Currently, the PESONet makes a single batch settlement in a day for same-day settlement. With more batch settlements in a day, the clearing interval will be reduced, allowing earlier crediting of funds to the recipient’s accounts within the same banking day.

The bills payment facility aims to remove the inefficiencies associated with the current fragmented bills payment mechanisms. The billers will be capable of collecting from their customers even if their payment service providers are different.

For a more flexible way for businesses and consumers to make payments, the request to pay service will allow the payee to send an electronic request for payment to the payer, indicating the amount to be paid and when it falls due.

The fourth initiative is the direct debit use case. Here, the payer sends the payee an electronic authority or mandate to draw funds directly from the payer’s account on a regular basis. This case is ideal for recurring payments such as monthly rentals, periodic loan amortizations, and quarterly insurance premiums.

These digital payments initiatives are seen to sustain the momentum on the growing preference in the use of digital payments. These initiatives are also expected to facilitate the steady growth of existing digital payment streams PESONet, InstaPay and the payments use cases EGov Pay and QR Ph.

For the increasingly popular PESONet and InstaPay, combined volume and value transactions show sustained growth with an average quarterly increase of 5% and 4%, respectively, for Q4 of 2020 and Q1 of 2021. The year-on-year growth of the combined PESONet and InstaPay volume and value also shows an upward trajectory with a surge of 124% in volume and 95% in value by end May 2021.

Volume and value of EGov Pay transactions have likewise logged encouraging quarter-on-quarter growth, rising by 51% and 74%, respectively, by the end of May 2021. Also by end-May 2021, the BSP recorded a year-on-year EGov Pay volume and value increase of 5128% and 1935%, respectively.

Not to be outdone, the quarterly growth of the volume and value of QR Ph P2P continue to be in an upward trend, increasing by 104% and 138%, respectively, from Q4 2020 to Q1 2021.

Further growth in QR Ph use is anticipated with the upcoming launch in September this year of QR Ph Person-to-Merchant payments or P2M, which will cover payments to merchants for purchase of goods and services. Later, it may also be used for bills payment.

The encouraging growth in digital payments shown in these figures, as well as the upcoming developments designed to provide efficiencies in P2B payments show a promising turn in the BSP’s digital transformation journey.

BSP Governor Benjamin Diokno has expressed his confidence that the usage and preference for digital payments that Filipinos have thus far shown will be sustained and spur further developments in financial digitalization. 

This will enable the country to fully benefit more from a cash-lite and financially inclusive economy.

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