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Philippines ramps up efforts to boost digital payments

Manila, Philippines: state authorities are seeking to encourage digital payments | Credit: gloverbh222; Pixabay

State authorities in the Philippines have launched several initiatives as part of an effort to significantly increase the use of digital payments over the next two years.  

The Southeast Asian country’s outgoing president Rodrigo Duterte signed an executive order directing the adoption of digital payments for government disbursements on 12 May.

Executive order 170 mandates all government departments and agencies including state universities and colleges and government-owned or government-controlled corporations to use digital channels in the disbursement and collection of payments.

The central bank meanwhile, is set to launch three ‘electronic payment streams’ aimed at pushing half of all retail transactions in the country to digital channels, Bangko Sentral ng Pilipinas (BSP) governor Benjamin Diokno announced during a webinar on 11 May.

Digital payment streams are the first of three ‘pillars’ set out in the BSP’s ‘Digital Payments Transformation Roadmap (DPTR) 2020-2023’. In this strategy document, which was released in October 2020, digital payment streams are described as embodying a BSP ambition to create ‘compelling, large-scale digital payments use cases’. They are to ‘act as catalysts for building an inclusive digital finance ecosystem by demonstrating the benefits, safety and reliability of the country’s retail payment system’.

‘Safe and efficient’ digital disbursement

The 44-page DPTR set up the BSP’s goals of converting 50 per cent of the total volume of retail payments into digital form and to get 70 per cent of Filipino adults to have transaction accounts with financial institutions by 2023. Its other two pillars are labelled ‘digital finance infrastructure’ and ‘digital governance standards’.

Under the executive order signed by Duterte – who was ineligible for re-election in the country’s presidential election, held on 9 May, because the president is limited to a single term – all agencies are directed to use ‘safe and efficient’ digital disbursement in the payment of goods, services and other disbursements, including the distribution of financial assistance, payment of salaries, wages, allowances and other compensation to employees. The Covid-19 pandemic is named as a key factor to issuing the order as it highlighted the benefits of using digital payment services across various sectors in the country, which has a population of about 109 million people.

The order directs all regulatory authorities to issue ‘necessary implementing rules and regulations’ within 90 days. After that, all agencies are called to fully implement digital disbursements and digital collections within six months. The order does also state that it ‘does not foreclose the acceptance of cash and other traditional modes of payment’.

“Digital collection of payments will expedite transactions, generate savings for the government and the public, and reduce the risk of graft and corruption,” the BSP’s Diokno said in a press release regarding Duterte’s executive order. He added that it would provide ‘robust support’ to the BSP’s efforts in promoting payments digitalisation and financial inclusion under the DPTR and the National Strategy for Financial Inclusion.

BSP’s three ‘electronic payment streams’

In respect of the BSP’s three ‘electronic payment streams’, the central bank – working with the Philippine Payments Management Inc (PPMI), the official payment system management body, and led by payment industry participants – plans to set up ‘bills pay, request to pay and direct debit facilities’.

The ‘bills pay’ stream will enable Filipinos to pay electricity, water and telephone bills even if the accounts of the customer and the biller are at different banks or other financial institutions. ‘Request to pay’ will let payees initiate collections by sending a request to the payor without having to provide account details or the amount. ‘Direct debit’ will let people manage recurring payments such as monthly rent, amortisations or insurance by authorising billers to automatically pull funds from the customer’s account.

Separately, in an effort to strengthen public trust in the financial system, Duterte signed the Financial Products and Services Consumer Protection Act (FCPA) into law on 6 May. The FCPA allows financial regulators to ‘take steps against financial service providers from performing acts that are disadvantageous to consumer welfare’, according to a BSP press release.

“The measure also provides consumers with a redress mechanism, while ensuring equitable treatment, transparency and data privacy,” Diokno said. He explained that with the FCPA, consumers would no longer need to go to court if their claim involved a return of money from a financial service provider. The new redress mechanism now provides financial regulators with legal authority to adjudicate and carry out enforcement actions.

Government’s ongoing e-payments push

In 2019, the BSP launched an online payment facility called eGov Pay for government transactions allowing citizens to make financial transactions with government agencies, such as paying taxes and other fees, electronically.

This facility was mentioned by the central bank in its DPTR a year later explaining how the list of participating government institutions had substantially expanded from two to 60. ‘A substantial number of government institutions are expected to be on board the eGov Pay in the near to medium term,’ the roadmap added.

The latest government initiatives are announced four months after the BSP launched its ‘Open Finance Roadmap 2021-2024’, a three-year strategy to get open finance off the ground, with policy goals including improving economic resilience and financial inclusion.

The roadmap set out actions including the development and adoption of industry-accepted standards under what it calls a ‘test-and-learn’ approach, as well as the creation of an Open Finance Oversight Committee Transition Group to facilitate initial policies and standards formulation. 

Duterte’s sucessor, Ferdinand ‘Bongbong’ Marcos Jr, is due to be sworn in and begin a six-year term on 30 June.


‘Philippines presents three-year open finance strategy’ – our news story (16 January 2022) on the Philippines’ central bank presenting a three-year strategy to get open finance off the ground 

‘Philippines looks to “industry-led” approach to open finance’ – our news story (2 February 2021) on the BSP’s draft circular to create the Open Finance Oversight Committee (OFOC)

‘Philippines central bank launches digital payments platform’ – our news story (28 November 2019) on the BSP launching an online payment facility for government transactions