The Bangko Sentral ng Pilipinas is upgrading the country’s digital retail payment infrastructure to help further facilitate cashless transactions and, in the process, help the economy grow faster, according to the country’s top financial regulator.
BSP Governor Nestor Espenilla Jr. said the improvements being made to the 16-year-old Philippine Payment and Settlements System (PhilPaSS) would enhance the “safety, efficiency and resiliency” of the scheme that allows real-time cashless transactions to be made between financial institutions and merchants and their customers.
“A safe and efficient payment system is a critical market infrastructure of a stable financial system,” he said, explaining that this payment system not only provided channels for funds to be transferred among banks and other institutions, but also functioned as an essential tool for the effective implementation of monetary policy.
“It plays a pivotal role in the smooth functioning of money and capital markets,” Espenilla added.
From the purely manual settlement of interbank transactions in the early 1990s, PhilPaSS has handled the settlement of time-critical and large-value financial transactions when it was started as a state-of-the-art system in 2002.
In its first five years, PhilPaSS processed an average of 1,000 transactions daily, valued at P35 billion a day. The BSP chief noted that over the last five years, the daily average rose to 6,000 transactions, valued at P1.4 trillion a day, as Filipinos embraced digital payments.
“An efficient retail payment system has the potential to transform the economy through the efficiency it brings to business transactions and the savings generated from a shift from paper-based to digital instruments,” Espenilla said. “It benefits the consumers and businesses in terms of the affordability, convenience and speed of payment services—the most basic and most used financial service. This is financial inclusion.”
Last Friday, the BSP’s Payments and Settlements Office held a conference that highlighted the critical need to put appropriate and innovative systems in place to process financial transactions in the most efficient way possible while ensuring their safety and integrity. Apart from large-value and time-critical transactions, the BSP likewise supports financial transactions on the retail level as these promote cost benefits to businesses and consumers alike.