NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
S. No.
SENATE
37
3? INDEX
Introduced by Senator Manuel "Lito" M. Lapid
AN ACT
PROMOTING THE ADOPTION OF DIGITAL PAYMENTS FOR FINANCIAL 
TRANSACTIONS OF THE GOVERNMENT AND ALL MERCHANTS AND FOR
OTHER PURPOSES
EXPLANATORY NOTE
The COVID-19 pandemic and its ensuing quarantine arrangements has led to 
two key market effects. First is increase in online transactions where people started 
gaining confidence in purchasing without having to go physically to the stores. Second 
is the inaease in digital payment transactions.
As concerns in the spread of the COVID-19 grew, many of our countrymen 
turned to digital payments as a means to send value without fomite-mediated virus 
transmission using paper cash and coins.
According to the 2021 Visa Consumer Payments Attitudes Study, 60 percent of 
the 1,000 respondents from Manila, Cebu, Cavite, Rizal, and Bulacan, carried less cash 
in their wallets and 84 percent tried going cashless. Respondents prefer using mobile 
wallets, 54 percent; card payment online, 52 percent; card payment at physical 
merchants, 44 percent; and quick response (QR) payments, 31 percent.1
According Visa Country Manager for the Philippines and Guam Dan Wolbert said 
importance of cashless transactions and digital payments was appreciated during the
1 Villanueva, Joan. Philippine News Agency. 29 March 2022. Digital payments growth seen to remain robust 
post-pandemic. Retrieved from: https://www.pna.gov.ph/articles/1170948


pandemic, following the movement restrictions imposed to address the spread of 
coronavirus disease 2019 (Covid-19). "While cash is still commonplace in the 
Philippines, the preference for cashless payments is clearly gaining momentum. Our 
study showed more Filipinos are confident to get by without; cash and for longer 
periods of time -- with more than half feeling confident to get by for a week or longer, 
as cashless payment options grow," he added.2
Patuloy po ang paglaki ng tiwala ng marami nating kababayan sa tinatawag na 
digital payments gaya po ng credit cards at e-wallet. Sa katunayan po, may mga LGU 
po tayo na nakapagbibigay ng ayuda gamit ang e-wallet. Bagama't pangunahin pa rin 
ang pag-gamit ng pananalapi, marapat na po natin tanggapin na magiging 
permanenteng bahagi po ng ating komersyo ang digital payments.
This bill mandates government offices to adopt digital transaction systems to 
allow them to pay and receive digital currency. It likewise mandates various 
government agencies to work together to promote digital payment transactions.
In doing so, we hope that we will help in stimulating our economy by facilitating 
faster and more secure transactions using online platforms.
In view of the foregoing, early passage of this bill is sought.
kNUEL "LITO" M. LAPID
Senator
2 Ibid.


NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE
S. No. 3
"mo6 202rii
[Ml
TIME 
BY:
Q, 01 COi
BIULS & INDEX
Introduced by Senator Manuel "Lito" M. Lapid
1 
AN ACT
2 
PROMOTING THE ADOPTION OF DIGITAL PAYMENTS FOR FINANCIAL
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TRANSACTIONS OF THE GOVERNMENT AND ALL MERCHANTS AND FOR
4 
OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines 
in Congress assembled:
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SECTION 1. Short Title. - This Act shall be known as the "Use of Digital
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Payments Act."
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SECTION 2. Declaration of Policy. - The State recognizes the vital role of
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information and communications technology particularly technology, towards financial
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Inclusion advancement and nation-building. The State also recognizes the need of
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promoting ease of doing business and efficient delivery of goods and services to the
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general public. Towards this end, the State shall promote financial inclusion through
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the use of safe, secure, and efficient digital payments. In various transactions of the
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government and the public - particularly for payments to government, and
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government disbursements to the public, which includes but is not limited to payments
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to or by private institutions, merchants, and beneficiaries, the State shall optimize the
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use of financial technologies and innovative payment systems for financial transactions
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and to strengthen financial inclusion. In so doing, the State shall encourage and
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facilitate the adoption of digital payments in a technology-neutral manner, where one
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technology is not unreasonably favored or given undue advantage over another.


SECTION 3. Objective. -J\\\s Act aims to facilitate transactions, arrangements, 
or exchanges of goods and services by promoting the universal use of safe, affordable 
and efficient digital pyments in financial transactions of the government and the 
general public.
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SECTION 4. Definition of Terms. - As used in this Act, the following terms shall
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mean:
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IV.
V.
"Access device"' refers to any card, plate, code, account number, 
electronic serial number, personal identification number, mobile device, 
or other information and communications technology 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 in electronic form;
"Account-based disbursement"refers to the disbursement of funds such 
as salaries, wages, allowances, and social benefits, among others, 
directly into the transaction account of the intended recipient held in any 
Bangko Sentral ng Pilipinas (BSP)-supervised entity as chosen and 
specified by the intended recipient;
"Basic deposit account (BDA)' refers to the deposit product offered by 
banks as defined under the BSP Manual of Regulations for Banks and its 
implementing guidelines;
"Digitai coiiection"refers to a mode of payment wherein businesses and 
citizens make payments to the government, including but not limited to, 
taxes, fees, and tolls, using a digital device such as mobile phone, point 
of sale, or computer. Payments can be made with bank transfers, 
electronic money, and payment cards including credit, debit, prepaid, or 
stored-value cards, among others;
"Digitai disbursement" refers to a mode of payment whereby 
disbursement of money or equivalent electronic representations of legal 
tender, for purposes of paying government expenditures, is made by


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crediting the target recipient's transactions account through advice to 
debit or electronic fund transfer facilitated by any government agency 
or instrumentality through their respective servicing bank; 
vi. "Digital Payments" refers to monetary payment transactions between 
two parties through a digital payment instrument in which both the 
payer and the payee use an electronic channel; 
vli. "Electronic fund transfer" refers to a transfer of funds between two 
transaction accounts in the same or different BSP-supervised financial 
institutions which are initiated and received using electronic devices and 
channels to transmit payment instructions; 
viii. "Electronic money (e-money)" refers to electronically-stored monetary 
value which is issued in accordance with the BSP Manual of Regulations 
for Banks and the manual of regulations for non-bank financial 
Institutions;
"Financialinclusion"refers to the state wherein there is effective access 
to a wide range of financial products and services for all Filipinos; 
"Government Servicing Payment Service Provider (PSP)"refers to bank 
and non-bank PSPs authorized to accept government funds and perform 
payment services on behalf of government entities. This includes 
authorized government depository banks (AGDBS) as defined by 
Department of Finance (DOF) regulations; 
xi. "^Information security standards" refers to standards which aim to 
protect and secure the confidentiality, Integrity, availability, authenticity, 
and non-repudiation of information and the data privacy of users of any 
digital payment platforms and other parties involved therein; 
xll. "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;
xiii. "Micro-payment transactions" refers to low-value payments Including 
but not limited to payments to sari-sari store owners, wet market 
vendors, as well as tricycle and jeepney drivers, the actual thresholds of 
which shall be determined by the BSP, pursuant to the objectives of this
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X.


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Act;
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xiv. 
"Payment Service Provider (PSP)" refers to an entity, such as bank or
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non-bank electronic money issuer, that provides payment services 
to
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end-users, such as consumers, merchants, and 
billers, including
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government institutions;
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"Payment system"refers to the set of payment instruments, processes,
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procedures and participants that ensures the circulation of money or
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movement of funds, which comply with the requirements set forth under
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Republic Act No. 11127 or the National Payment System Act;
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xvi. 
"Transaction Account"refers to an account, such as but not limited to a
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BDA, or e-money account held with a BSP-supervised financial institution
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that can be used to store, send, and receive funds.
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SECTION 5. Adoption of Digitai Payments for Government Disbursements. - All
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government entities, including but not limited to national government agencies
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(NGAs), foreign-based government agencies, all government corporations, local
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government units (LGUs), State Universities and Colleges (SUCs), and local
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universities and colleges (LUCs), are hereby mandated to utilize safe, and efficient
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digital disbursement in the payment of goods, services, and other disbursements
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including but not limited to cash assistance and payments of salaries, wages,
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allowances, and honoraria of its employees, whatever nature of appointment.
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Government entities shall be allowed to disburse funds directly into the recipient's or
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beneficiary's transaction account held in government or private financial institutions
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without the need for special arrangement with each of these financial institutions. For
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this purpose, said government entities may use the automatic debit arrangement
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interoperable electronic fund transfer or any other appropriate facility of its
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government servicing PSP.
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Accountable officers of the government entities shall observe due diligence in
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ensuring the accuracy of the recipient's or beneficiary's identity. Uses of government
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funds through direct crediting shall remain transparent to state auditors.
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Government entities shall be responsible for preparing the payment instruction


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with the necessary details, including the recipient's or beneficiary's name, transaction
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account details, and amount, among others, only after proper authorization in
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accordance with established accounting and auditing rules and regulations.
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The government servicing PSP shall carry out the payment instruction and
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submit the verified list of successful and failed fund transfers and other relevant details
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to the government entity disbursing the fund. Subject to the agreement with the
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government entity, the government servicing PSP may collect fees from the
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government entity for the electronic fund transfer services.
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In case of unsuccessful digital disbursement, there shall be a recovery
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mechanism that will ensure the continuity of delivery of payment services: Provided,
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That in cases of calamities or other emergencies, where payments through digital
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means may be affected, non-digital payout channels may be explores.
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SECTION 6. Adoption of Digitai Payments for Government Coiiections. - All
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government entities, including but not limited to national government agencies
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(NGAs), foreign-based government agencies, all government corporations, local
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government units (LGUs), State Universities and Colleges (SUCs), and local
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universities and colleges (LUCs), shall offer digital collection as a mode, in addition to
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acceptance of cash payment, for the collection of taxes, fees, tolls, imposts and other
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revenues, including non-income collections and receipts.
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Government entities shall utilize secure payment processing solutions to ensure
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acceptance of various digital payment methods. For this purpose, said government
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entities may engage the services of established PSPs: Provided, That government
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entities shall avail only of interoperable digital payment solutions. Notwithstanding any
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law to the contrary, partner PSP of a government entity shall not be limited to
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government servicing banks.
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SECTION 7. Adoption of Interoperabie Digitai Payment Soiutions. - The BSP
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shall implement initiatives that aim to accelerate the adoption by all PSPs of
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interoperable digital payment technologies and appropriate standards thereof, such
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as but not limited to the National Quick Response (QR) Code Standard meant to hasten


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the interoperability of QR-driven payment services and eliminate the need for
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merchants and clients to maintain several accounts.
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In addition, NGAs, government corporations, SUCs, LGUs, and merchants shall
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undertake measures to promote the adoption of the Open Finance Framework in
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accordance with the guidelines set forth under the applicable BSP rules and regulations
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which will enable sharing of customer-permissioned financial data and foster
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adherence to data security and privacy standards.
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The digital payment solutions adopted by government entities shall allow for
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real-time receipt of funds by the recipient government entity, immediate issuance of
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electronic invoices and/or official receipts to payors, regular audit reports, and other
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technical features that will aid in the fulfillment of the objectives of this Act. To ensure
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that these digital payment solutions adhere to applicable international standards on
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information security, data privacy, and electronic data interchange between financial
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institutions, among others, government entities shall avail of digital payment solutions
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under the BSP's National Retail Payment System Framework.
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Existing agreements between government entities and PSPs shall be honored
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until the respective terms thereof expire: Provided, That parties concerned shall
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endeavor, within one year from the effectivity of this Act, to implement amendments
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to such agreements with intention to remove provisions detrimental to public interest.
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In all instances, collection and payment schemes that prevent transparency and
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accountability over public funds, as well as arrangements disadvantageous to the
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government, shall be discontinued.
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There shall be a technical working group (TWG) composed of the Commission
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on Audit (COA), Department of Budget and Management (DBM), Department of
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Finance (DOF), Bureau of the Treasury (BTr), Bureau of Internal Revenue (BIR), the
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Government Procurement Policy Board, and other relevant agencies that will provide
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guidance and promote cost-efficiency and transparency In procurement of digital
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payment solutions by government entities. Consistent with the respective mandates
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of the member-agencies, and in coordination with the COA, the TWG shall have the
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following powers and functions:


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a) Oversee and monitor the procurement of digital payment solutions by 
government entities and ensure that the same is in accordance with existing 
laws, rules and regulations;
b) Consider the formulation of standard terms and condition for PSPs, in 
consultation with the BSP and COA. Pursuant to its mandate, the GPPB may 
also issue specific procurement guidelines for the engagement of PSPs;
c) Resolve issues relative to the implementation of this Act, without prejudice 
to the individual member-agencies resolving such concerns pursuant to their 
respective mandates;
d) Call on any department, agency or office under the Executive Branch for 
the effective implementation of this Act; and
e) Perform such other function pursuant to the fulfillment of the objectives of 
this Act.
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SECTION 8. Establishment of a Government Payment Gateway. - The BSP, in
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consultation with the DOF, DBM, COA, Department of Information and
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Communications Technology (DICT), BIR, Bureau of Customs (BoC), Bureau of the
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Treasury (BTR), digital banking experts, academe, and other appropriate public sector
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and banking industry stakeholders, may cause the establishment of a government
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payment getaway through which all government entities may process digital payments
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made to them through PSPs, websites, mobile phone applications, or other access
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devices.
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The government payment getaway shall allow for real-time settlement of
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accounts and receipt of funds by the recipient government entity, immediate issuance
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of electronic invoices and/or official receipts to payors, regular audit reports,
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interoperability between the digital payment technologies, and other technical
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features that will aid in the fulfillment of the objectives of this Act. Said getaway shall
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adhere to relevant international standards on information security, data privacy, and
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electronic data interchange between financial institutions.
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SECTION 9. Digital Capability of Merchants. - To accelerate the adoption of
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digital payment, LGUs shall, by ordinance, encourage and grant monetary and non-


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monetary incentives to merchants within their localities to establish and/or outsource
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arrangements and/or mechanisms that would enable them to receive payments from
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clients and make payments to creditors and suppliers using digital channels.
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LGUs shall ensure that merchants in their jurisdictions have access to
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appropriate digital payment solutions and have capacity to effectively use the same
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with due consideration to small and micro-merchants, including, but not limited to,
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market vendors, tricycle operators and food stalls. The LGU shall extend assistance to
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small and micro merchants to facilitate their adoption of digital transaction capability.
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The BSP, Department of Trade and Industry (DTI), DILG, and DICT shall provide
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capacity building for the NGAs, government corporations, SUCs, LGUs, and merchants
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on the use of digital payments.
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SECTION 10. Promotion of Digital Payment Transactions. - To optimize the
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benefits of digital payments, scale up financial institution, and promote sustainability,
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all government entities shall prioritize the use of safe and efficient digital payment in
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their financial transactions.
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Ail government entities covered by this Act shall also adopt a comprehensive
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incentive framework for selected financial transactions to encourage the use of digital
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payments. LGUs shall, likewise, grant relevant incentives for merchants providing
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efficient digital payment systems.
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The BSP, In coordination with relevant stakeholders, shall promote measures
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on financial and digital literacy, and consumer protection to strengthen the public's
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trust in digital payment transactions.
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To enable the general public to adopt digital payments, micro-payment
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transactions shall be subject to graduated pricing or be rendered free of any service
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charge as determined by the BSP in consultation with the merchants and the payment
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services industry, as may be represented by the BSP-accredited payment system
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management body.
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The DICT shall implement measures to further enhance the availability,
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accessibility, reliability, and cost-efficiency of internet services to support the


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Government's program on the digitalization of financial transactions.
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SECTION 11. Multi-Year Roadmap for Digital Payment Adoption. - The BSP, in
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coliaboration with relevant government entities, shall prepare and regularly update a
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multi-year roadmap on digital payments to ensure the timely implementation and
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optimal realization of the objectives of this Act.
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The Multi-year Roadmap shall be aligned with the e-government masterplan
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formulated by the DICT in consultation with other key government agencies, and shali,
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among others, set targets and outcomes, such as but not limited to the widespread
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adoption of digital payments by merchants, for a minimum period of five (5) years,
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and include strategic public and private interventions and possible government
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programs and projects. The roadmap shall be subject to annual review.
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SECTION 12. Transitory Provision. - Government entities shall be responsible
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for ensuring proper transition of their respective agency's disbursement and collection
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procedures and policies to digital payments.
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Digital disbursement shall be implemented within six (6) months from the
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issuance of the implementing rules and regulations (IRR) of this Act.
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For the implementation of digital collections, a tiered transition period not
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exceeding three (3) years from the issuance of the IRR shall apply. The tiering
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guidelines, to be established by the TWG as part of the IRR, shall reflect differentiated
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transition timeframes based on the readiness and capability of the government
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entities. Government entities deemed capable and ready based on defined criteria
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shall be required to implement digital collection within a shorter transition period while
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others may be allowed a longer transition period but not to exceed three (3) years.
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SECTION 13. Information Security and Data Privacy. All data information and
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information and communications technology systems and networks, used for digital
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payments pursuant to the objectives of this Act shall be secured and protected at al
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times. The DICT and the National Privacy Commission shall, in consultation with the
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BSP, defined and prescribe the minimum Information security standards or compliance
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of PSPs who are covered by this Act and are not under the oversight and regulatory


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authority of the BSP.
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SECTION 14. Obligations of Payment System Providers. - In line with the
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declared policy in this Act, all PSPs shall have the following obligations:
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a) Integrate security and data privacy by design and by default in the
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development stage of the payment systems;
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b) Process personal and sensitive personal information in the system in
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accordance with any of the criteria for lawful processing provided for under
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the relevant laws, rules and regulations;
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c) Implement reasonable and appropriate organizational, physical and
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technical security measures for the protection of personal data and uphold
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the rights of data subjects;
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d) Provide reasonable and timely assistance to NGAs, government
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corporations, LGUs, SUCs, and/or merchants, in accordance with relevant
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rules and regulations, to enable them to respond to a request from clients
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to exercise any of their rights and any other correspondence, inquiry or
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complaint received from a client or other third party in connection with the
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processing of the personal data in the payment system;
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e) The PSP performing the function of collection of money and/or payment of
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transaction on behalf of the government agency shall, to the extent
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necessary, cooperate with the COA for the examination, audit, and
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settlement of all accounts pertaining to the revenue and receipts, and
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expenditures or uses of funds of all NGAs, government corporations, SUCs,
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and LGUs. The PSP shall allow COA to perform its audit procedures and to
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determine whether collections are complete, and use of funds are
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authorized;
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f) Comply with the requirements Indicated in the standard terms of reference
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or standard minimum terms and conditions that may be issued by the TWG.
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SECTION 15. Penalties and Sanctions. - Without prejudice to the penalties and
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sanctions provided in Republic Act No. 11127 or "The National Payment Systems Act"
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and other laws, whenever any person or entity willfully violates this Act, rule or
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regulation, directives or orders duly promulgated by the BSP pursuant hereto, the
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person or persons responsible for such violation shall be punished by a fine of not less
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than Two hundred thousand pesos (P200,000.00) or more than Two million pesos
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(P2,G00,000.00) or by imprisonment of not less than two (2) years nor more than ten
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(10) years, or both, at the discretion of the court.
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SECTION 16. Interpretation. - Nothing in this Act shall be construed to exempt
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any government funds in the possession of private entities from the constitutional
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authority and duty of the COA to examine, audit, and settle all accounts pertaining to
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the revenue and receipts of, and expenditures or uses of funds and property, owned
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or held in trust by, or pertaining to, the government. All digital payments involving
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government transactions under this Act shall be subject to post-audit of the COA.
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Accordingly, the COA shall promulgate the pertinent rules and regulations for all
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transactions covered by this Act.
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SECTION 17. Appropriations. - Government entities may be allowed to include
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in their respective budget amounts that will cover the reasonable costs of establishing
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and maintaining the infrastructure, system and/or processes adjustments as well as
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transaction fees that they may shoulder in connection with the implementation of
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digital payments, including but not limited to, merchant discount rate, processing fees,
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cash-out fees and administration fees: Provided, That the release of said budget may
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be conditioned on the actual adoption of digital payments by the concerned
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government entities.
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Government entities may also top-up cash assistance with a standard amount
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to cover any transaction fees that may be incurred by recipients or beneficiaries when
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claiming or withdrawing said cash assistance from their respective transaction
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accounts.
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The amount necessary for the implementation of the provisions of this Act shall
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be taken from the current year's budget of the NGAs, government corporations, SUCs
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and LGUs. Thereafter, such sums as may be necessary for the continued
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implementation of the Act shall be incorporated in the annual General Appropriations
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Act, corporate operating budget, or appropriation ordinance, as the case may be.
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SECTION 18. Implementing Rules and Regulations. - The BSP, in coordination 
with the DBM, COA, DOF, BTR, BIR, DICT, DOST, DILG, DTI, and other relevant 
agencies, shall promulgate the rules and regulations implementing the provisions of 
this Act within ninety (90) days from its effectivity.
SECTION 19. 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.
SECTION 20. Repealing Cause. - 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.
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SECTION 21. Effectivity. - This Act shall take effect fifteen (15) days after its
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publication in the Official Gazette or in a newspaper of national circulation.
Approved,
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