By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK will soon allow banks and other financial firms looking to offer basic digital financial services to start operations without securing prior approval from the regulator, amid an industry push towards e-payments.
The Bangko Sentral ng Pilipinas (BSP) said it is simplifying the licensing requirements for non-banks that will offer electronic payment and financial services (EPFS), as it looks to promote digital solutions.
“Under the enhanced EPFS licensing policy, the BSFIs (BSP-supervised financial institutions) that provide basic services or those that enable clients to access information on their deposit, loan and other accounts (e.g. outstanding balance), or receive funds in electronic means shall simply notify the BSP within 30 days prior to the launch of those services,” the BSP said in a statement on Friday.
The relaxed rules are meant to increase the “availability of safer and more efficient channels for delivering banking, payment, remittance, investment, and other financial services.”
However, financial firms that will provide “advanced” services — which include fund transfer across accounts and initiate other types of transactions — will still have to seek prior BSP approval, although the central bank said the process has also been made simpler.
The licensing process involves three steps: the BSFIs need to do a self-assessment on their compliance with the criteria set under the BSP’s existing licensing framework. If compliant, they shall submit a certification proving so and must request a confirmation of eligibility to offer EPFS from the central bank.
Later on, the BSFI needs to submit documentary requirements to the BSP before it can be given a license.
With the new rule, players holding an existing license must re-register their e-services with the BSP by March 31, including those who are licensed but are yet to launch their platforms before Sept. 30 this year.
Still, all financial entities need to submit periodic prudential reports to the central bank for monitoring and policy purposes.
All firms that will offer online services are required to sign up with the automated clearing houses that process digital payments, namely the InstaPay and the Philippine Electronic Fund Transfer System and Operations Network (PESONet).
The central bank said these reforms are expected to help instill a “highly efficient” funds flow and fuel economic growth.
The BSP is setting sights on its goal of raising the share of e-payments to 20% of total transactions by the year 2020, coming from a measly one percent back in 2013. Digitizing payments and remittances would be crucial towards financial inclusion, as it would improve access while also trimming transaction costs.