Clearing houses on track for rollout by September

PHILIPPINE BANKS are seen on track in rolling out two clearing houses for electronic transactions by September, the Bangko Sentral ng Pilipinas (BSP) chief said, seen to simplify payments and access to funds across industry players.

BSP Governor Nestor A. Espenilla, Jr. said the clearing houses for digital payments are expected to go live by next month, in keeping with the industry’s target under the National Retail Payments System (NRPS).

In March, banks and e-money issuers agreed to set up the PESO Net clearing house for electronic fund transfers, and the InstaPay — which will process real-time credit for online settlements worth P50,000 or less within and across banks — by the third quarter of 2017.

“That’s still our time frame. I just met with the key players and they said they can do it,” Mr. Espenilla said in a recent interview in his office in Manila.

The NRPS aims to steer financial transactions gradually away from cash and checks towards electronic fund transfers and e-wallets. Improved ease of access to money is seen to spur more economic activity, as the funds can be deployed for other uses once received by retail clients and businesses.

The PESO Net will receive payment messages from one bank account to another, and will process money transfers in batches. This platform is expected to eventually replace the use of physical checks, Mr. Espenilla previously said.

The digital clearing house, which will build on the existing Philippine Clearing House Corp., is eyed to be used by the national government for salaries, budget releases, and revenue collections.

On the other hand, the InstaPay platform is seen to be a 24/7 platform that would process small-value fund transfers across financial players. The technology will spring from the existing interbank network BancNet.

A Payment System Management Body composed of industry representatives will oversee the two clearing houses, in coordination with the BSP.

The central bank is looking to raise the share of e-payments from 1% of total transactions in 2013 to a high of 20% by 2020, which is seen to fast-track the availability of funds circulating in the local economy. The United States Agency for International Development has said that shifting to electronic transactions from cash-based settlements could help boost gross domestic product growth by as much as 2-3%.

Mr. Espenilla has been actively promoting the NRPS in his public speeches one month into his six-year term as central bank chief, saying that using digital banking channels would boost growth and improve financial inclusion in the Philippines.