The Bangko Sentral ng Pilipinas (BSP) considers the enactment of the National Payment Systems Act as critical to the country’s payment systems development agenda and to the stability and efficiency of the monetary and financial system.
Republic Act No. 11127, or the National Payment Systems Act (NPSA), provides a comprehensive legal and regulatory framework which supports the twin objectives of maintaining a payment system that is necessary to control systemic risk and providing an environment conducive to the sustainable growth of the economy.
A payment system provides the channels through which funds are transferred among banks and other institutions to discharge payment obligations arising from economic and financial transactions across the entire economy. An efficient, secure and reliable payment system reduces the cost of exchanging goods and services. It is an essential tool for the effective implementation of monetary policy, and the smooth functioning of money and capital markets.
“The NPSA will foster a level playing field for all participants as they will now be governed by a single overarching legal and regulatory framework. This will bring about more competition, greater efficiency, and foster digital innovations for both banking and payments products and services,” BSP Governor Nestor A. Espenilla Jr. said.
President Rodrigo R. Duterte signed last 30 October 2018 this landmark legislation which allows the Philippines to join other countries in ASEAN and other parts of the world in the shared goal of promoting and maintaining a secure and reliable operation of payment systems.
The NPSA mandates the BSP to oversee payment systems in the Philippines and exercise supervisory and regulatory powers for the purpose of ensuring the stability and effectiveness of the monetary and financial system.
Under the law, the BSP shall coordinate with other regulators and concerned government agencies to avoid gaps, inefficiencies, duplications, and inconsistencies in its regulation of other systems related to or interconnected with payment systems. This includes coordination with the Securities and Exchange Commission for an orderly discharge of payment obligations arising from securities transactions.
The NPSA gives the BSP the power to designate a new payment system if it determines that the existing payment system is posing or has the potential to pose a systemic risk or the designation is necessary to protect the public interest.
Under the NPSA, the BSP has the power to require operators of designated payment systems to secure prior authority to determine the capability of the operator in terms of financial resources, technical expertise and reputation.
The NPSA also authorizes the BSP to accredit or require, when deemed necessary, a payment system management body organized by participants of the designated payment system for the purpose of regulation.
All operators of payment systems as defined under the NPSA shall register with BSP in a manner and within a specific period that may be prescribed by the Monetary Board within six (6) months from the effectivity of the law.
Under the NPSA’s transitory provision, payment systems existing on the day of the effectivity of the law shall be given sufficient time, as may be determined by the BSP, to comply with the requirements of the NPSA.
The BSP will issue implementing rules and regulations, and provide guidance to new entities covered under the NPSA on how to comply with the requirements of said law. The NPSA took effect 15 days after its publication in the Official Gazette last November 15.