Unregistered, celebrity-backed ‘Lyka’ told to cease operations by BSP

MANILA, Philippines—The central bank on Friday (July 23) ordered popular social media-based platform Lyka—which counts as endorsers celebrities Ivana Alawi, Pia Wurtzbach, Coco Martin and Nadine Lustre, among others—to cease its services in the Philippines for being an unregistered payment system operator.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said it also “invited” Lyka to register itself with the regulator as required by Republic Act No. 11127 or the National Payment Systems Act.

Lyka, a social media platform launched in the Philippines by a Hong Kong-based company, allows users to purchase, exchange, and use gift cards in electronic mode, or GEMs, as payment for goods and services.

The service made waves earlier this year after Ivana Alawi posted on her social media account that she was able to purchase a Ford Expedition SUV for her mother using her Lyka GEMs. In May, former Miss Universe Pia Wurtzbach revealed she bought a P3.8-million Mini Cooper using the same platform.

Other celebrities, models and social media “influencers” regularly post glamor shots of them enjoying the services of resorts and upscale restaurants and paying for these services with Lyka GEMs, which have an exchange rate of P1 per GEM.

Users who sign up for the service are given an initial value of 5 GEMs, and can earn in increments of 0.02 to 0.05 GEMs for activities on the social media platform including “liking” photos of other members, uploading information or interacting with other members.

Members can also send and receive Lyka GEMs among themselves.

The service has been criticized by privacy advocates for its supposedly opaque rules on how members’ data are handled, with at least one online watchdog warning that members may find their personal data sold to other companies, based on the language of Lyka’s opt-in agreement.

According to the BSP, its policy making Monetary Board has ascertained that these activities make Lyka a payment systems operator and is, thus, required to register with the BSP, which is needed before it is allowed to continue with its activities.

“The operators of Lyka have already expressed their willingness to register with the BSP” as a payment systems operator, the BSP said.

“The BSP reminds entities operating a payment system to comply with the requirement under the National Payment Systems Act and BSP Circular No. 1049 to register with the BSP,” the agency said.

Circular No. 1049 provides for the rules and regulations on the registration of these firms which, in turn, allows the BSP to have oversight of the payment system these mainly online companies operate to ensure that they function safely, efficiently, and reliably, consistent with the central bank’s objectives of consumer protection and financial stability.

Payment system operators that are required to register, but are found to be operating without registration, shall be directed to comply with the circular’s registration requirements. Those that fail to comply may be ordered to stop operations until immediate action is taken to register with the BSP.

This is without prejudice to other enforcement actions that may be taken against the operator and its directors, officers or employees in accordance with the BSP’s authority over payment systems under the law.

The BSP reminded the public to transact only with registered payment firms that are listed on the agency’s website. These firms may be cash-in service providers, bills payment service providers, and entities like payment gateways, platform providers, payment facilitators and merchant acquirers that enable sellers of goods and services to accept payments, in cash or digital form.

To confirm if a payment system operator is duly registered with the BSP, the public may view the list at: https://www.bsp.gov.ph/PaymentAndSettlement/COR.pdf.

TSB