BSP bats for EO; endorses bill for digital infra

The Bangko Sentral ng Pilipinas (BSP)-led Financial Inclusion Steering Committee (FISC) is strongly urging the quick approval of the proposed Open Access in Data Transmission Act and the signing of an executive order (EO) for satellite-based internet connectivity to accelerate the country’s shift from cash-heavy to a cash-lite society in two to three years.

BSP Governor Benjamin E. Diokno said the FISC on Tuesday has endorsed the Open Access bill as a crucial law to promote digital payments. “In its meeting last February 2, the FISC agreed to endorse the Open Access in Data Transmission bill to the Legislative Executive Development Advisory Council or LEDAC as a priority legislative measure,” said Diokno. He said the BSP “is counting on the passage of this critical ICT policy reforms to promote broad-based access to reliable and affordable internet services.”

The Open Access bill as Senate Bill No. 45 has been pending approval for some time. The proposed bill which seeks to eliminate barriers to market entry and to reduce broadband costs, will have a game-changing impact on the speed of internet connectivity and services.

“The bill aims to bridge the broadband infrastructure gap in the country in bringing in more players in the broadband sector,” said Diokno. “A salient feature of the bill is the removal of the requirement for Congressional franchise and National Telecommunication Commission certificate of public convenience and necessity. This will make the broadband industry more open and competitive.”

Diokno, who wants to bring 50 percent of all payment transactions in digital forms as soon as possible, has also endorsed to President Duterte a proposed EO to allow the use of satellite technology and services to expand the reach of e-payments.

“Digital connectivity is a critical enabler for scaling digital finance in the country.  However based on the BSP’s 2019 financial inclusion survey, internet access in the country is uneven,” said Diokno. Internet penetration is only at 60 percent in urban areas and just 40 percent in rural areas.

“We see satellite technology as instantly deployable internet infrastructure in rural areas (currently) unserved. This is the why the FISC which is chaired by the BSP, endorsed to the Office of the President (OP) the proposed EO that will allow non-telco providers like wireless internet service providers and cable/TV operators to own, build and operate satellite-based broadband facilities,” he said. He disclosed that another economic development cluster of which the BSP is a member, has also supported the FISC proposal to the OP.

“The proposed EO is now under review by the Office of the President,” said Diokno.

Diokno has reached out to President Duterte on the proposed EO last December 4.

Besides bringing in 50 percent of all financial transactions as digital by end-2022, the BSP is also targetting to get 70 percent of all adult Filipinos to have formal accounts by the same year.

BSP’s phased digital shift

On Thursday, during Diokno’s regular and virtual “GBED Talks” with the press, he said the BSP’s phased digital transformation from “cash-heavy to cash-lite and eventually, to a coinless and cashless society” is on track.

The impending coinless phase in payments transactions is an addition to the cash-lite target. Diokno said by 2025, which is beyond his term as BSP governor and also past the Duterte administration’s term as well, the public will go coinless.

BSP data show that as of end-2020, coin demand has declined by 60 percent year-on-year in value and 57 percent in volume. “While softer economic activity may have partly led to the drop, broadening access to safe and convenient e-payment options may have also contributed to the decline in coin demand,” said Diokno.

The movement restrictions brought on by the COVID-19 pandemic accelerated the growth of e-payments. Last year, the volume of PESONet transfers went up by 376 percent year-on-year to 15.3 million while the value increased by 188 percent to P951.6 billion. InstaPay volume, in the meantime, rose by 459 percent to 86.7 million, while transactions were valued at P463.4 billion, up by 340 percent year-on-year.

Since its launch in 2017 until end-2020, the combined PESONet and InstaPay transactions expanded by 10,802 percent in volume while value transactions increased by 929 percent.

The BSP is still updating data on the e-payment measurement for 2020 but preliminary numbers on the use of digital payments during the pandemic “give us optimism,” said Diokno. “(We’re) likely to achieve the 50 percent target sooner rather than later.” Currently there are 67 financial institutions in PESONet and 52 in InstaPay.

Sustaining the momentum of e-payments

Diokno said more initiatives to promote and expand e-payments are on the pipeline this year such as the multiple batch settlement of PESONet transactions to increase the frequency, the Bills Payment facility, the Request to Pay facility, and the QRPh for payments from persons to merchants or P2M.

“These payments digitalization initiatives will be implemented successively. We are on track for the pilot run on the use of QRPh for P2M payments by April this year, followed by the full launch set in July wherein all key payment service providers are expected to be onboarded,” said Diokno.

He said QRPh P2M will be immediately followed by the Bills Payment facility. “This will enable billers to collect from customers even if they do not have a common service provider (while) the Request to Pay facility will be rolled soon thereafter. This will empower payees to initiate collections by simply sending a request to pay to the payer,” said Diokno.

In the meantime, the Direct Debit facility will come next as an initiative to “ensure the national payments system remains responsive to the needs of businesses and consumers,” he added.