Republic of the Philippines
HOUSE OF REPRESENTATIVES
Queson City

EIGHTEENTH CONGRESS
Second Regular Session

HOUSE BILL no 8280

Introduced by HON. LUIS RAYMUND “LRAY” F, VILLAFUERTE, JR.

AN ACT PROMOTING THE ADOPTION OF DIGITAL PAYMENTS FOR
FINANCIAL TRANSACTIONS OF THE GOVERNMENT AND ALL MERCHANTS
AND FOR OTHER PURPOSES.

The Philippines has one of the highest percentages of people in Southeast Asia who
do not have bank accounts and who transact In cash. A study in 2015 shows that the
share of digital payments in the country was only about 1% by volume or 26 million
out of 2.5 billion payments per month

However, the digital payments transactions in 2018 are nearly 20 times the estimated
total monthly volume in 2013. By providing an enabling environment to accelerate the
adoption of digital payments, this bill will give proper support to shift to digital and
cashless payments.

Among the clear benefit of doing digital payment is cost savings through increased
efficiency and speed. It also promotes transparency and security by increasing
accountability and tracking, reducing corruption and theft as a result.

In view of the foregoing, the approval of this bill is most earnestly sought.

Vl frvr

LUIS RAYMU} LRAY” ILLAFUERTE, JR.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
Second Regular Session

House BILL No. 8280

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

AN ACT PROMOTING THE ADOPTION OF DIGITAL PAYMENTS FOR
FINANCIAL TRANSACTIONS OF THE GOVERNMENT AND ALL MERCHANTS.
AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. - This Act shall be known and cited as the "Use of Digital
Payments Act of 2020."

SEC. 2. Declaration of Policy - The State recognizes the vital role of information and
communications technology in nation-building. The State also recognizes the need of
promoting ease of doing business and efficient delivery of good and services to the
general public. Towards this end, the State shall promote the use of safe and efficient
digital payments In various transactions of the government and the public - particularly
for payments to government, government payments to the public, and payments to
business and merchants, to optimize the use of technology and innovative payment
system for financial transactions and to strengthen financial inclusion.

SEC. 3. Objective. - This Act aims to facilitate transactions, arrangements, or
exchanges of goods and services by promoting the universal use of safe and efficient
digital payments in financial transactions of the government and the general public.

SEC. 4. Definition of Terms. - As used In this Act, the following terms shall mean:

(a) "Access device" refers to any card, plate, code, account number, electronic serial
number, personal Identification number, or other telecommunications service,
equipment or Instrumental Identifier, or other means of account access that can be
used to obtain money, goods, services, or any other thing of value or to Initiate a
transfer of funds (other than a transfer originated solely by paper Instrument);

(b) "Digital Payments" refers to the monetary transaction between two parties through
a digital Instrument In which both the payer and the payee use an electronic medium.


(c) "Merchant" refers to a person or entity engaged in buying and selling merchandise,
purchasing of services, skills, or expertise, and leasing of goods and services. It also
includes credit-granting entities, lending institutions, pawnshops, remittance
companies and other money service business; and

(d) “Payment system" refers the set of payment instruments, processes, procedures
and participants that ensures the circulation of money or movement of funds, which
comply with the requirements set forth under Republic Act No. 11127.

SEC. 5. Use of Digital Payments. - Ali national government agencies (NGAs),
government-owned and controlled corporations (GOCCs), and local government units
(LGUs) are hereby mandated to utilize safe and efficient digital payment in the
collection of taxes, fees, tolls, imposts and other revenues and in the Payment of
goods, services and other disbursements. To this end, these government entitles may
be allowed to Include in their respective budgets amounts that will cover transaction
fees that they may shoulder In connection with the implementation of digital payments,
including but not limited to, merchant discount rate, processing fees, cash-out fees
and administration fees: Provided, That the release of said budget may be conditioned
on the actual adoption of digital payments by the concerned government entities.

The NGAs, GOCCs and LGUs are likewise mandated to utilize secure payment
processing solutions to ensure acceptance of various digital payment methods, For
this purpose, said government entities may engage the services of established digital
payment system providers (PSP).

To facilitate compliance with this Act, NGAs, GOCCs, and LGUs must adopt account-
based disbursements whereby target recipients directly receive government payments
into their bank or digital accounts. These government entities may create their
respective digital payment technical support and maintenance service. The technical
support and maintenance service shall be responsible for troubleshooting and in
maintaining coordination with the PSP partner for technical and other concerns within
the agency. They shall also be responsible for ensuring the proper transition of their
respective agency's payments and disbursement procedures and policies to electronic
payments. The creation of the technical support and maintenance service shall be
without prejudice to any technical support arrangement between the agency and the
PSP partner pursuant to a contract or agreement.

The Bangko Sentral ng Pilipinas shall accelerate the adoption by all PSPs of the
national Quick Response (QR) code standard to hasten the interoperability of QR-
driven payment services and eliminate the need for merchants and clients to maintain
‘several accounts.

The Government Procurement Policy Board, in coordination with the Bangko Sentral
ng Pilipinas, shall issue guidelines to be observed when procuring the services of a
PSP that provide electronic payment: Provided, That only PSPs duly authorized and
accredited by the Bangko Sentral ng Pilipinas may be engaged by agencies to service
their digital payment transactions; Provided, Further, That the interoperability of
differing infrastructures supporting the digital payments shall be pursued.


Notwithstanding any law to the contrary, partner PSP of a government entity is not
limited to government financial institutions.

SEC. 6. Accreditation. -The Bangko Sentral ng Pilipinas shall accredit PSPs in
accordance with the requirements provided under Republic Act No. 11127, otherwise
known as the "National Payment Systems Act”.

SEC. 7. Digital Payment Capability of Merchants. -To accelerate the adoption of digital
payment, LGUs shall, by ordinance, require merchants within their localities to
establish and/or outsource arrangements and/or mechanisms that would enable them
to receive payments from clients and make payments to creditors and suppliers in
digital form as a pre-requisite for the approval or renewal of their business permits. No
new or renewal of business permit shall be approved unless the merchant concerned
show to the satisfaction of the LGU that a functional digital payment system accessible
by mobile phone or other access devices is installed or provided by a duly registered
PSP in the merchant partner's place of business.

The LGUs shall extend assistance to the merchants to facilitate their adoption of digital
payment transaction capability. The Department of Trade and Industry and the Bangko
Sentral ng Pilipinas shall also facilitate measures to provide capacity building for the
NGAs, GOCCs, LGUs, and merchants on the use of digital payments.

SEC. 8. Promotion of Digital Payment Transactions. - Utilizing digital payment in
financial transactions provides clients with convenient, transparent, safe, expeditious,
and efficient mode of transacting business. To optimize the benefits of this
technological innovation, scale up financial inclusion, and promote sustainability,
NGAs, GOCCs, and LGUs shall prioritize the use of safe and efficient digital payment
20 in their financial transactions.

NGAs, GOCCs, and LGUs shall also explore the feasibility of adopting a
comprehensive Incentive framework for selected financial transactions to encourage
the availment of digital payments. LGUs may, likewise, impose reduced fees or grant
other incentives for merchants providing efficient digital payment system.

The Department of Science and Technology and the Department of Information and
Communications Technology shall implement measures to further enhance the
availability and cost of internet connection to support the Government's program on
the digitalization of financial transactions.

SEC. 9. Penalties and Sanctions. - Without prejudice to the penalties and sanctions
provided in Republic Act No. 11127 or "The National Payment Systems Act" and other
laws, whenever any person or entity willfully violates this Act, rule or regulation,
directives or orders duly promulgated by the Bangko Sentral ng Pilipinas pursuant
hereto, the person or persons responsible for such violation shall be punished by a
fine of not less than Two hundred thousand pesos (P200,000.00) or more than Two
million pesos (P2,000,000.00) or by imprisonment of not less than two (2) years nor
more than ten (10) years, or both, at the discretion of the court.

SEC. 10. Appropriation. - The amount necessary for the implementation of the
provisions of this Act shall be taken from the current year's budgets of the NGAs,


GOCCs, and LGUs. Thereafter, such sums as may be necessary for the continued
implementation of the Act shall be incorporated in the annual General Appropriations
Act, corporate operating budget, or appropriation ordinance, as the case may be.

SEC. 11. Implementing Rules and Regulations. - The Bangko Sentral ng Pilipinas shall
promulgate the rules and regulations implementing the provisions of this Act within
ninety (80) days from its effectivity.

SEC, 12. Separability Clause. - If for any reason, any part or provision of this Act is
declared invalid or unconstitutional, the remaining parts or provisions not affected shall
remain in full force and effect.

SEC. 13. Repealing Clause. - All laws, presidential decrees, executive orders, rules
and regulations contrary to or inconsistent with the provisions of this Act are hereby
repealed or modified accordingly.

SEC. 14, Effectivity - This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in a newspaper of national circulation.

Approved.