EI RESSS
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RECEIVED
= pate? 9 JUL 2005

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

2568

House Bill No.

INTRODUCED BY REPRESENTATIVES RALPH WENDEL P. TULFO
AND JOCELYN P. TULFO

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

EXPLANATORY NOTE

Fast-paced developments in the digital financial landscape has led to the rise
of digital transactions which call for digital and cashless payments. Notably, the
Philippines has once again surpassed its 2024 target of 52-54% for digital payments,
as set under the Philippine Development Plan 2023-2025. According to the 2024 e-
payments measurement conducted by the Bangko Sentral ng Pilipinas, digital
payments have accounted for 57.4% of total transaction volume. This marks a
significant year-on-year increase of 4.6 percentage points, highlighting the continued
momentum in the country’s shift toward electronic payment channels.!

Among the three primary payment use cases - payments made by the
government (G2X), payments made by persons (P2X), and payments made by
businesses (B2X) - G2X have consistently remained the most cash-lite with 97.2% of
transactions conducted digitally as of 2024. Payments from persons to the government
show opportunities for digitalization since digital government collections in 2024 was
only at 24.6%. Meanwhile, P2X have made a remarkable leap toward digitalization
with 72.2% of total transactions processed through digital channels. This increase is
accompanied by a decrease in the volume of non-digital payments which could
indicate a shifting preference to pay digitally. On the other hand, B2X digitally
represent 38.6% of the overall transaction value, with business-to-business supplier
payments contributing significantly to this growth as more formal industries
transition toward cash-lite ecosystems.

| Mesina-Romero, Bridget Rose, et al; "From Surge to Stability: Digital Pay ments Driving A Steady Transition
(2024 Status of Digital Payments in the Philippines); BANGKO SENTRAL NG PILIPINAS, 2024,
https://www.bsp gov.ph/PaymentAndSettlement/2024_Report_on_E-payments_Measurement.pdf.

2 Ibid.


In support of this framework, we seek to accelerate the nationwide adoption of
digital and cashless payments for purposes of cost savings through increased
efficiency and speed in transactions and transparency and security by increasing
accountability and tracking. This bill also seeks to extend the benefits of digital and
cashless payments to the financially excluded, or those underserved and unserved
sectors, including micro, small, and medium enterprises (MSMEs), farmers and
fisherfolks, informal sector workers, senior citizens, persons with disabilities, forcibly
displaced persons, indigenous peoples, and migrant workers and their families.

Financial inclusion does not only pertain to account ownership, but also to the
ability to access a wide-range of fit-for-purpose financial services in line with one’s
capabilities and needs. With increasing digitalization, there must also be an increase
in consumer protection capabilities and resources.

In view of the foregoing, the urgent passing of this bill is earnestly sought.

CZ

RALPH WENDEL P. TULFO JoceLyé4y/Tul
Representative Representative
2m District of Quezon City ACT-CIS Partylist


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

House Bill No. 29638

INTRODUCED BY REPRESENTATIVES RALPH WENDEL P. TULFO
AND JOCELYN P. TULFO

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

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

SECTION 1. Short Title. - This Act shall be known and cited as the “Promotion
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
goods and services to the general public. Towards this end, the State shall promote
financial inclusion, optimize the use of technology and innovative payment systems
for financial transactions, and promote the electronic conveyance of payment for
various transactions with the government, to and among business entities merchants,
and among the general public.

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:

(a) Access devices 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 refer to monetary payment transactions between two (2)
parties through a digital payment instrument in which both the payer and the payee
use an electronic channel;

(©) Merchant refers to a person or entity engaged in buying and selling
merchandise, purchasing goods and 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, except financial institutions
supervised by the Bangko Sentral ng Pilipinas (BSP), which shall be governed by
specific BSP regulations and requirements on digital services;

(d) Payment system refers to the set payment instruments, processes, procedures
and participants that ensures the circulations of money or movement of funds which
comply with the requirements set forth under Republic Act No. 11127, otherwise
known as “The National Payment Systems Act”; and

(e) Payment service provider (PSP) refers to an entity that provides payments
services to end-users, such as consumers, merchants, and billers, including
government institutions.

SEC 5. Use of Digital Payments. - All national government agencies (NGAs),
government-owned or -controlled corporations (GOCCS), and local government units
(LGUs) are hereby mandated to utilized safe and efficient electronic or digital means
of receiving payment for taxes, fees, tolls, imposts, and other revenues and for the
payment of goods, services, and other disbursements. To this end, government
entities may be allowed to include in their respective budgets the amounts that will
cover the cost of establishing and maintaining the infrastructure, system and process
adjustments as well as transaction fees that they may shoulder in connection with the
implementation of digital payments, including merchant discount rate, processing
fees, cash out fees, administration fees: Provided, That the release of said budget may
be conditioned on the actual adoption of digital payments by the concerned
government entities.

To facilitate compliance with this Act, NGAs, GOCCs, and LGUs shall adopt
account-based disbursements whereby target recipients directly receive government
payments into their transaction accounts. These government entities may create their
respective digital payment technical support and maintenance service units which
shall be responsible for troubleshooting and maintaining coordination with the PSP
partner for technical and other concerns within the agency. They shall also be
responsible for ensuring the proper transitions of their respective agency’s payments
and disbursement procedures and policies to digital payments. The creation of the
technical support and maintenance service units shall be without prejudice to any
technical support arrangement between the agency and the PSP partner pursuant toa
contract or agreement: Provided, That, the contract or agreement shall be subject to the
applicable regulations of the BSP.


The BSP 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 shall, in coordination with the BSP,
issue guidelines to be observed when procuring the services of a PSP that provide
digital payment: Provided, That, government entities shall avail only of interoperable
digital payment solutions.

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

SEC. 6. Digital Payment Capability of Merchants. - To accelerate the adoption
of digital payment, LGUs shall, by ordinance, require merchants within their localities
establish or outsource arrangements 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 ensure that merchants in their jurisdictions have access to
appropriate digital payment solutions and have the capacity to effectively use the
same, with due consideration to small and micro-merchants, including market
vendors, tricycle operators and food stalls. The LGU shall extend assistance to small
and micro-merchants to facilitate their adoption of digital transaction capability. The
BSP, Department of Trade and Industry (DTI), Department of Interior and Local
Government (DILG), and the Department of Information and Communications
Technology (DICT) shall also facilitate measures to provide capacity building for the
NGAs, GOCCs, LGUs, and merchants on the use of digital payments.

SEC. 7. Promotion of Digital Payment Transactions. - 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 in their financial transactions.

The 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. Moreover, LGUs may impose reduced fees or grant
other incentives for merchants providing efficient digital payment systems

The BSP shall in coordination with relevant stakeholders, promote measures
on financial and digital literacy, and consumer protection to strengthen the public’s
trust in digital payment transactions.


The Department of Science and Technology and the DICT 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. 8. Implementing Rules and Regulations. - The BSP shall in, coordination
with the Department of Budget and Management, DTI, DICT, and DILG, promulgate
the rules and regulations implementing the provisions of this Act within ninety (90)
days from its effectivity.

SEC. 9. 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. 10. 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. 11. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of national circulation.

Approved,