Bank consortium to self regulate payment system

MANILA, Philippines — A consortium of banks will act as a payment system regulator after the Bangko Sentral ng Pilipinas (BSP) accredits the group as a payments system management body.

BSP Governor Benjamin Diokno said the Monetary Board approved the accreditation of the Philippine Payments Management Inc. (PPMI) under Republic Act 11127 or National Payment Systems Act (NPSA) through a resolution   issued on June 25.

With the accreditation, Diokno said the PPMI should satisfactorily perform its self regulatory function over members pursuant to the provisions of the NPSA and the payment system oversight framework issued by the BSP under Circular 1089.

Diokno said the self-regulated organization is responsible for managing the conduct and compliance of its members with the legal and regulatory requirements.

“As a body organized for self-regulation, the PPMI shall promote the development of the retail payment systems, and establish payment system rules, agreements, and standards to ensure that payment transactions are safely and efficiently cleared and settled with finality,” the BSP chief stated in Circular Letter 2020 – 036.

To instill discipline among its members, Diokno said PPMI should adopt a policy on the imposition of penalties and sanctions to its erring members, subject to review and prior approval by the BSP.

The BSP earlier recognized PPMI as a self-governing body to oversee proper operations and monitor the implementation progress of the National Retail Payment System (NRPS).

It oversees the environment by which financial institutions cooperate to enable payments across accounts in different financial institutions in alignment with the policies and strategies of the NRPS Framework launched by the BSP in December 2015.

The issuance of the framework strengthened the oversight of payment systems to mitigate potential systemic risks amid the novel coronavirus disease 2019 or COVID-19 pandemic and after the country was dragged into the $2.1 billion Wirecard AG scandal.

“This is part of the BSP’s reform agenda to strengthen governance of payment systems, especially during the COVID-19 pandemic, and as we transition to the new economy,” Diokno said.

The framework introduces unified supervision with overlaps seen between the oversight authorities of the BSP and other regulatory agencies. It identifies a joint supervisory approach for financial activities that involve linked settlements such as the delivery of a security against payment of cash.