Republic of the Philippines
HOUSE OF REPRESENTATIVES ;’
Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILLNO. 279

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY HORIBATA
AND HON. NICOLAS ENCISO VII!

EXPLANATORY NOTE

A basic measure of financial inclusion is account ownership, which has shown improvement
as the number of Filipinos with accounts rose from 23% in 2017 to 29% in 2019.' A year
later, 2020, the year that we did not expect it to be, has shown another side of the financial
industry - the major shift in promoting and utilizing digital transactions such as online
banking, e-payments and e-wallets, etc. Around four million new accounts were opened
digitally from March 17 to April 30, 2020, all of which happened during the height of the
ECQ. 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 which are both
timely and relevant in heeding the demands of the so-called new normal.

Among the clear benefits 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. These benefits of e-
payments are also significant for sectors who need them most: wage earners,
microentrepreneurs and beneficiaries of government programs. Through electronic fund
transfers (EFT), they can promptly and safely receive salaries, pension, social security
benefits, and other types of financial assistance.° It is high time that banking in the
Philippines be in harmony with the rapid advances of technology while catering to the needs
of all types of sectors,

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

.<
LUI “LRAY” F. VILLAFUERTE, JR. MIGUEL LUI§ R. VILLAFUERTE
.,
HONY G. HORIBATA NICOLAS’ENCISO VIII

*https://www.bsp.gov-ph/Media_And_Research/Year-
‘end%20Reports%200n%20BSPH%20Financial%20Inclusion%20Initiatives/2020/microfinance_2020.péf

* ibid
5 ibid


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Queson City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 275

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.,
HON. MIGUEL LUIS R. VILLAFUERTE, HON. TSUYOSHI ANTHONY HORIBATA
AND HON. NICOLAS ENCISO VIII

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."

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. - All 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 penaities and sanctions
provided in Republic Act No. 11127 or "The National Payment Systems Act" and
other laws, whenever any person or entity wilfully 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 (90) 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.