BSP strengthens cashless payment system
The Bangko Sentral ng Pilipinas has taken another step toward the establishment of a safe, efficient and reliable payment system that would, in turn, promote the use of cashless transactions in the country.
The BSP said that it recently entered into a deal with the Philippine Payments Management Inc. (PPMI), which would play a critical role in the infrastructure under the so-called national retail payment system framework.
The memorandum of agreement signed between BSP Governor Nestor Espenilla Jr. and PPMI chair Justo Ortiz last week effectively recognized the latter’s group as the payment system management body, while the PPMI recognized the authority of the BSP as the primary overseer of the retail payment system.
The payment system management body is a critical component of the retail payment framework. The creation of this industry-led self-governing body is an implementation of the key principle espousing the separation of the governance of the retail payment system from the actual clearing operations.
Late last year, the BSP adopted the national retail payment system framework, which applies to all BSP-supervised financial institutions.
The agreement calls for the BSP to provide continuing guidance to PPMI for alignment of its policies, standards and rules, while the PPMI undertakes to ensure proper implementation of the payment scheme principles through its policies, strategies and rules.
The BSP and PPMI agreed to have a shared responsibility in monitoring new or emerging trends in the retail payment industry and to notify each other of any relevant information that would warrant appropriate action from either party.
They will also engage each other in consultation concerning policy formulation especially where it impacts the policy and regulatory framework governing financial institutions with respect to their payment system arrangements as well as on common concerns to prevent conflict with any BSP or PPMI action.
The agreement also reiterated that PPMI members would undertake direct clearing activities within the PPMI governance structure through multilateral agreements among qualified direct clearing participants covering a specific payment stream.
The PPMI will also monitor and require its members to settle clearing results of automated clearing houses through the BSP’s real time gross settlement system. Finally, the agreement also includes provisions on settlement arrangements and notification to the BSP as a risk management tool.