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By Genalyn Kabiling
President Duterte has signed a law that empowers the Bangko Sentral ng Pilipinas (BSP) to supervise and regulate all payment systems in the country.
President Rodrigo Duterte
(REUTERS/Erik De Castro / MANILA BULLETIN)
Republic Act No. 11127 or “Act providing for the regulations and supervision of payment systems” seeks to improve efficiency and curb risks in the country’s financial system.
“The State shall promote, through the Bangko Sentral, the safe, secured, efficient and reliable operation of payment systems in order to control systemic risk and provide an environment conducive to sustainable growth of the economy,” the law read.
The law, also known as “The National Payment System Act,” has authorized the BSP “to oversee the payment systems and exercise supervisory and regulatory powers for the purpose of ensuring stability and effectiveness of the monetary and financial systems.”
RA 11127 defines payment system as “the set of payment instruments, processes, procedures and participants that ensures the circulation of money or movement of funds.”
The BSP has the power to “designate” a payment system if it determines that the system poses a systemic risk or the designation is necessary to protect public interest.
It can also require operators of the payment system to secure priority authority from BSP as well as accredit or require a payment system management body organized by the participants for self-regulation.
The Central Bank is also empowered to issue, through the Monetary Board, rules and regulations governing the standard of operations of payment systems, adequacy of resources to ensure security and operational reliability, protection of the rights of the end-users and service providers, among others
Other powers of the BSP are to issue orders to any participant of payment system to ensure safety, efficiency or reliability of the system; require participants to submit operation reports and provide information for statistical, policy development and regulatory purposes; and assess and collect from operators an annual fee to cover expenses.
The law also stated that the BSP will have the authority “to own and operate payment systems as may be deemed necessary by the Monetary Board.”
It will also coordinate with other regulators and concerned government agencies to avoid gaps, inefficiencies, duplications, and inconsistencies in the regulation of other systems interconnected with payment systems.
With six months from the effectivity of the law, all operators of payment systems must register with the BSP.
Operators of the designated payment system shall be required to incorporate as stock corporations and must meet the requirements prescribed by the Monetary Board. The Securities and Exchange Commission will not register the articles of incorporation of an operator of a payment system unless accompanied by a certificate of authority to register issued by the Monetary Board.
RA 11127 also stated that the operator of the designated payment system will be responsible for the maintenance and operation of a safe, efficient and reliable system.
Any person or entity violating the law shall be punished by a fine ranging between P200,000 to P2 million or imprisonment of two years to 10 years or both at the discretion of the court.
The Monetary Board may also suspend, disqualify or remove any officers of the operator of a designated payment system if they violate the system charter, delay submission of reports, refuse to allow examination into affairs of operator, making false statement to examiners, among others.
The law, signed by the President last October 30, takes effect 15 days following publication in the Official Gazette or two newspapers. The BSP has been assigned to craft the rules and regulations of the new law within 60 days from effectivity of the Act.
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