Page 1 of 38 
BSP Digital Payments Transformation Roadmap 2020-2023 
 
I. Vision and Strategic Outcomes (Targets by 2023) 
 
The BSP’s thrust to promote financial inclusion and digitalization of payments are mutually 
reinforcing: they go hand-in-hand, each enabling the other. As the BSP continues to foster 
the growth and development of digital payment innovations through enabling policies and 
regulations, it also promotes further financial inclusion. Digital payment innovations lower 
transaction costs and eliminate the oft-cited barriers to owning a transaction account. 
 
The widespread use of the internet and emergence of technological innovations make 
digital payments ubiquitous, more accessible and affordable, thereby propelling the 
progressive shift towards a cash-lite economy. Moreover, with the sudden onset of the 
COVID-19 global pandemic, the shift towards digital payments has become an imperative 
as physical distancing rules become the norm under the “New Economy” environment. By 
using digital payments with due care and vigilance, Filipinos reduce the need for mobility 
and prevent health risks from face-to-face and over-the-counter (OTC) financial 
transactions. The greater usage of digital payments will also facilitate the growth of 
Fintech businesses engaged in e-commerce businesses as the consumption of goods and 
services is increasingly driven by online purchases. 
 
Objective 
 
 
An efficient, inclusive, safe and secure digital payments ecosystem that supports the 
diverse needs and capabilities of individuals and firms, towards achievement of the 
BSP’s mandates  
 
 
Strategic Outcomes 
 
a. Strengthened customer preference for digital payments by:  
• Converting 50% of the total volume of retail payments into digital form, 
considering that payment services are the gateway of most Filipinos to the 
formal financial system. This shift can be made by offering customers faster 
and more affordable payment options that provide greater convenience. 
 
• Expanding the financially included to 70% of Filipino adults, by onboarding 
them to the formal financial system through the use of payment or transaction 
accounts. With the use of these accounts over time, they are able to build 
financial profiles with their payment service providers (i.e. banks and non-bank 
e-money issuers). 
 
b. More innovative and responsive digital financial services characterized by  
(1) innovation-driven use of consumer data to design financial products and 
services that are responsive to the needs of consumers, including those from the 
lower income sectors; (2) PhilSys-enabled Know-Your-Customer (KYC) to allow 
more individuals to access financial services; and (3) availability of a next-
generation payment and settlement system to facilitate real time processing of 
financial transactions of the banking public and of the Philippine economy. 
 
Page 2 of 38 
II. Background 
 
The Current Landscape of Digital Payments and Digital Finance Inclusion 
 
The first signs of electronic banking in the country sprouted in the 1980s with the 
introduction of the automated teller machine (ATM). Initially, banks formed three 
different ATM consortia (Expressnet, Megalink and Bancnet). ATM services did not turn 
out to be as efficient as intended with several consortia co-existing and operating in silos. 
This prompted banks to open up their systems to inter-ATM network transactions until 
eventually all networks merged into one consortium that has serviced the whole banking 
system since 2015 (see Figure 1).  
 
Figure 1. A snapshot history of ATMs in the Philippines: ATMs continue to capture public interest since its 
introduction in the 1980s. 
 
1980s – 1990s 
 
 
 
2000 – 2010 
 
 
2011 – 2015 
• Introduction of ATMs 
• Operation of BancNet 
• Interconnection of ATM 
switch of BancNet and 
Megalink 
 
• Launch of online banking 
and payment gateway of 
BancNet 
• Interconnection of ATM 
switch of BancNet and 
Expressnet 
 
• Consolidation of 
operations of BancNet 
and Megalink 
 
Source: BSP-Payment System Oversight Department (BSP-PSOD) 
 
The favorable acceptance of card-based facilities (e.g., debit and credit cards) prompted 
banks to deploy more point-of-sale (POS) terminals, replacing the traditional “imprenters” 
where these cards were swiped each time a payment transaction was made by 
cardholders. However, as of end-2019, ATMs continued to grow (albeit at a slower pace), 
while the number of credit cards and POS terminals have been declining, suggesting that 
other forms of financial access and payments services are being explored by consumers. 
 
 
Table 1. 
Number of
2017
2018
2019
Growth Rate
2018-2019 
ATM Terminals
20,276
21,278
21,777
2.3%
POS Terminals
181,748
103,852
79,693
-26.0%
Credit Cards
8.44 million
9.4 million
9 million
-4.2%
Source: Financial Inclusion Dashboard Q4 2019 
 
But perhaps, the biggest game changer in the field of financial technology came at the 
start of the 21st century with the rise of the internet. It opened up opportunities for 
greater operational efficiency for banks and other payment service providers, as banks 
began to design and launch internet banking facilities that allowed their clients to access 
information on their accounts, transfer funds, pay bills, apply for loans, and make other 
banking and payment transactions using personal computers. 
 
These innovations in the financial and payments ecosystem paved the way for the 
Philippines to become the first country to introduce the concept of mobile money services 
in 2001. This concept was first introduced by a telecommunications company in order to 
Page 3 of 38 
reach the unbanked and underserved segments of the economy. Through these mobile 
money services, consumers were able to do fund transfers and remittances, pay bills, and 
purchase goods with the use of only their mobile phones. These services were initially 
made available through SMS and was then the first use case for digital remittances by 
utilizing the SMS technology through mobile phones. These developments, in turn, were 
the impetus for the BSP to issue electronic money or “e-money” regulations as a way of 
creating an enabling regulatory environment that can support the growth of mobile 
money services in the country. With the growing young and tech savvy population and 
low rates of financial inclusion, these mobile money services carried the potential to 
acquaint these segments of the population with a simple and convenient way of digitally 
storing value and using these funds to perform different payments transactions. 
 
These opportunities continue to be present given that, as of January 2020, internet users 
in the Philippines were estimated to include 63 million people - more than half of the 
country’s 105 million population - and largely belong to the age group of 16 years old and 
above.1 Similarly, the country has a substantial chunk of the population using mobile 
phones, with an estimated 75.66 million users as of 2020.2 At the same time, the 
Philippines topped the average internet usage index in Asia, with Filipinos found to be 
spending an average of 10 hours and 2 minutes a day in the internet.3 
 
Another significant development that contributed to a change in the payment landscape 
is the deepening mobile phone penetration rate. According to a 2015 country diagnostic 
of the Better Than Cash Alliance (BTCA),4 mobile penetration rates in the country exceed 
100%, with mobile data accounting for over 45% of gross revenues of the 
telecommunications sector. The recent 2019 Financial Inclusion Survey (FIS) Report 
showed similar results. Sixty-nine percent (69%) of adult respondents have a mobile 
phone, of which 75% own a smartphone. This is equivalent to 52% of total adult 
population with a smartphone, significantly higher than 38% in 2017. 
 
With mobile phones being a viable channel for mobile banking and electronic payments, 
there has been a substantial growth in the number and amount of e-money transactions 
which reflects the ongoing shift towards digital payments as shown in the following table: 
 
Table 2. 
E-Money
2017
2018
2019
Growth Rate
2018-2019 
Total amount of transactions 
(Inflow+Outflow) (in billion PH) 
963
1,090.1
1,485.3
36%
Active e-money accounts (in millions)
2.2
5.0
8.8
76%
Prepaid cards linked to E-money
25.2
28.2
20.6
-27%
Source: Financial Inclusion Dashboard Q4 2019 
 
 
 
Figure 2. 
                                                             
1  Number of internet users in the Philippines as of January 2020, www.statista.com 
2  Number of internet users in the Philippines as of January 2020, www.statista.com 
3  Philippines tops world internet usage index with an average 10 hours a day, The Guardian News and Media 
4  Better Than Cash Alliance Philippine Country Diagnostic (July 2015), which may be downloaded through this 
link: 
https://btca-prod.s3.amazonaws.com/documents/38/english_attachments/UNCDF-BTCA-Philippines-
diagnoctic-20151014.pdf?1445264531 
Page 4 of 38 
 
 
 
 
 
 
 
 
 
 
 
 
But majority of Filipinos remain financially excluded and underserved 
 
Despite these developments, however, current data on usage of digital financial services 
show a seeming disconnect as a large segment of the population remain financially 
excluded. In the 2019 FIS Report, it was found that 71% of the adult population or around 
51.2 million Filipinos continue to lack ownership of a transaction account, a basic indicator 
of financial inclusion, and the most basic tool to make digital transactions.  
 
Interestingly, only 1 in 10 adults use their mobile phones and the internet for financial 
transactions. Despite a majority of the adult population being mobile phone users, only 
12% of mobile phone owners and 21% of adults owning an account use their mobile 
phones to perform financial transactions. The same holds true for internet users with only 
9% of those having internet access reportedly using the internet for financial transactions.  
 
 
Figure 3. 
 
          Source: 2019 FIS Report 
 
e-Money Accounts
8.8 Million 
Active e-money wallets
Payment Cards
20.6 Million 
Prepaid cards 
(linked to e-money wallets) 
9 Million 
Credit cards 
43 Million 
Debit cards 
e-Banking
21,780 
ATMs 
28,438 
E-Money Agents
79,693 
POS terminals 
Page 5 of 38 
Internet or mobile banking significantly lags behind other modes of transaction for all 
types of accounts. Bank and e-money accounts are still mostly transacted via ATMs, but 
27% use online or electronic platforms. OTC is the most used mode of transaction for all 
other types of accounts. Even microfinance NGO accounts registered the lowest use of 
ATMs, suggesting that these are not tied to a card or other payment instruments. 
 
 
Figure 4. 
 
             Source: 2019 FIS Report 
 
The Demand Side of Payments 
 
According to the 2019 FIS, payments continue to be the most dominant financial 
transaction with 61.2 million Filipinos, representing 85% of the adult population, making 
and receiving payments of various forms such as income (i.e., salaries, benefits, pension, 
dividends or income from business), loan proceeds, and insurance pay-out.  
 
Payment transactions remain significantly cash-heavy, with the OTC method still 
preferred over other modes. Even the least cash-heavy transactions such as payment of 
government loans and contributions are skewed toward OTC.  This is followed by salary 
deduction, which is an alternative mode for payment of government loans (43%), social 
contributions (42%) and taxes (16%). Only 1% of payers paid their bills online, while a 
measly 0.1% paid their personal loans via auto-debit or auto-credit arrangement. 
 
Even payment disbursements from the government such as salaries (75%), loan proceeds 
(76%) and benefits (56%) are mainly received in cash, while majority (60%) of pension 
payouts are received through an account. Meanwhile in the private sector, payments 
received in the form of business income (100%) and loan proceeds (97%) are also 
predominantly in cash. For payment of salaries, however, 88% of recipients accepted their 
salary in cash/check while only 12% received their salary through an account. 
Page 6 of 38 
 
The use of cash for payments was made by choice as this mode is still considered to be 
more convenient (85%), more secure (28%), affordable due to lack of fees (20%) and 
reliable (19%). Payments via salary deduction are also considered convenient (39%) and 
done due to lack of choice (49%). 
 
 
Figure 5. 
 
Source: 2019 FIS Report 
 
The Supply Side of Payments 
 
At present, e-money issuers include banks, non-bank financial institutions supervised by 
the BSP, and non-bank institutions registered with the BSP as money transfer agents.5 
Since 2010, there has been a trend increase in the number of e-money issuers (see  
Figure 6). Similarly, e-money agents/distributors who function as cash-in/cash-out agents 
of  e-money issuers have also been increasing (see Figure 7). The latest data also suggest 
exponential growth in prepaid cards until 2016 (see Figure 8). However, in 2017, prepaid 
cards materially declined as issuers had to migrate to the Euro Mastercard Visa (EMV) 
standard for added card security. Issuers delisted many accounts until the clients 
concerned claimed their EMV-compliant cards. 
 
Figure 6. Number of e-money issuers: There is a 
trend increase in the number of e-money issuers.
Figure 7. Number of e-money agents: E-money agents 
have also been increasing. 
                                                             
5  The BSP defines e-money as a monetary value represented by a claim on its issuer that is (1) electronically 
stored in an instrument or device (either cash cards, stored value cards, or e-wallets accessible via mobile 
phones or other access devices); (2) issued against receipt of funds of an amount not lesser in value than the 
monetary value issued; (3) accepted as a means of payment by persons or entities other than the issuer; and 
(4) withdrawable in cash or cash equivalent.5 Source: BSP Circular No. 649 dated 9 March 2009. 
Page 7 of 38 
 
Source: BSP-PSOD
Source: BSP-PSOD
 
Figure 8. Number of e-money accounts: There is a notable increase in prepaid cards until 2016.  
The number of e-money accounts was relatively stable until 2016, then surged in 2018 and 2019.
 
Source: BSP-PSOD 
 
The BSP scanning showed that most of the payment service providers, banks and non-
bank electronic money issuers alike, were operating closed-loop systems, allowing only 
intrabank or intra-institution funds transfer. Hence, the BSP recognized the need for 
regulatory reform to address this and developed a system of governance that would break 
closed-loop systems and ensure that the potential payment service providers (PSPs), 
including the small banks in far flung places, can participate in the payment system. This 
system of governance is called the National Retail Payment System (NRPS). The NRPS 
helped level the playing field among PSPs as new entrants can now offer an improved 
experience to the consumers and force the incumbent dominant players to innovate and 
improve their payment services. 
 
Socio-economic disparities, changing perceptions, lack of financial literacy are 
challenges to owning an account, thus making digital payments difficult  
 
Despite the fact that some  barriers have been addressed, cost concerns and perceptions 
on utility still remain as primary considerations for not owning an account.  A primordial 
reason cited is the lack of enough money, as reported by almost half (45%) of the 
unbanked. This is a valid concern, particularly in the Philippines where poverty persists 
and incomes remain low. This is followed by the perceived lack of need for an account 
(27%) and inability to meet documentary requirements (26%).  
 
At the same time, lack of awareness is a main reason for not using a mobile phone or the 
internet for financial transactions. This is followed by lack of trust, weak signal or slow 
internet connection, and preference to transact at the bank or ATM. These reasons 
indicate an entrenched culture and mind-set of preferring various methods of payment 
other than digital means.  
 
 
Figure 9. 
Page 8 of 38 
 
Source: 2019 FIS Report 
 
Correlated to the issue of affording an account are the gaps in smartphone ownership and 
internet access, which are visibly divided along the lines of locality, geography and 
income.  
 
Locality wise, urban areas have 6 out of 10 adults that are smartphone owners and 
internet users, compared to 4 out of 10 in rural areas. Geographically, 7 out of 10 adults 
in Metro Manila have a smartphone and use the internet, while this figure drops as one 
goes farther from the capital (Balance Luzon – 6 in 10, Visayas – 4 in 10, Mindanao – 3 in 
10). In terms of income, 8 out of 10 adults in socio-economic class ABC own a smartphone 
and are using the internet which is twice as high than class E where only 4 out of 10 adults 
have a smartphone and with access to the internet. 
 
Providing for a safe, efficient, and robust payment and settlement infrastructure to 
facilitate financial transactions of all Filipinos and the Philippine economy 
 
Under the Republic Act No. 7653 (The New Central Bank Act) approved in 1993, the central 
bank established facilities for interbank clearing with deposit reserves maintained by 
banks in the BSP used as the basis for the clearing of checks and the settlement of 
balances.  Payment instructions were then physically delivered by banks to BSP for 
settlement at designated time periods during the day.   
 
To address risks and improve processing time that can be made from a manual system, 
procedures to transmit payment instructions electronically were developed beginning 
1997.  Electronic fund transfers (EFTs) were sent through a clearing unit and thereafter 
electronically transmitted to the BSP for settlement by batch at designated time periods.  
Participant banks then electronically received updates on the balances of their demand 
deposit accounts (DDAs) at certain time periods (e.g., on an hourly basis) during the day. 
 
As the financial system became more integrated, sophisticated and more complex, 
payments and settlement systems became more exposed to risk.  International-setting 
bodies agreed that a real time gross settlement (RTGS) system is a powerful payments 
infrastructure that can limit risks for interbank transactions as it provides timely and final 
settlement of time-critical payments on a continuous basis.  In year 2002, the BSP 
established the PhilPaSS for the payment and settlement of financial transactions and 
settlement in Philippine Peso through banks’ DDAs using a fully automated RTGS design.  
This system is owned and operated by the BSP through the BSP Payments and Settlements 
Page 9 of 38 
Office.  The PhilPaSS clears and settles on a per transaction basis (rather than by batch), 
real time (vs. deferred), and on a gross basis (rather than on a net basis).  To economize 
on the use of central bank money, PhilPaSS also integrated a deferred netting system or 
DNS which provides frequent netting of payments within the day for bulk transactions 
that are not time sensitive.  Further, participants are given access to the system to enable 
them to send EFT instructions directly to the BSP and to monitor their accounts/ records 
online and any time during the business day.                          
 
In addition to electronically transferring funds amongst participating-financial institutions, 
participants in PhilPaSS are able to manage their DDAs on-line through the system. 
 
By minimizing payment and settlement risks through PhilPaSS, the BSP is able to provide 
safe and efficient payment and settlement systems for Filipinos (3rd pillar), and enhance 
the availability, convenience, efficiency and integrity of financial transactions (2nd pillar of 
financial stability) as well as of financial markets (1st pillar of monetary stability). 
 
Integrating more payment systems in PhilPaSS 
 
The BSP endeavors to have a more integrated payment & settlement system to allow for 
more & more financial transactions to be secured & completed on a timely manner, 
thereby enhancing the integrity of these transactions & furthering economic 
development.  The PhilPaSS started off with processing only interbank transactions of 
commercial & rural banks.  In succeeding years, interbank transactions of other 
institutions were incorporated – investment houses/ NBFIs in 2003, & thrift banks & 
financing companies in year 2009.    Payment instructions for checks & peso trades 
(clearing done through the Philippine Clearing House Corporation or PCHC), ATM 
transactions, and interbank & interdealer repo transactions (through the Settlement 
Highway of the Philippine Dealing System or the PDS) were soon thereafter enrolled. 
 
Figure 10. 
 
 
In the first 5 years of operations, PhilPaSS processed about 1,400 transactions on average 
in a day, valued at Php 350 billion per day.  In the last 5 years, PhilPaSS is already 
Page 10 of 38 
processing more than 6,400 transactions valued at Php 1.3 trillion daily.  Financial 
transactions that settle today in PhilPaSS include: 
1. Payment instructions initiated directly by participants for customer payments, 
government collections, and other interbank transactions; 
2. Transactions with the BSP such as deposits, withdrawals, payment of supervisory fees, 
deposits of maturing loan obligations, settlement of investments in BSP’s short-term 
liability products, and fees collected for on-line application of foreign currency 
denominated loans; and  
3. Transactions through other financial infrastructures that provide essential services to 
the banking public such as those made through the ATMs, ACHs (InstaPay and 
PESONet), checks, as well as trades of government securities (allowing for compliance 
with international standards on delivery versus payment) and of peso-US dollars 
(international standards on payment versus payment).   
 
Figure 11. 
 
 
Bridging the Gaps in Financial Access and Digital Payments 
 
Introduction of the Basic Deposit Account (BDA) 
 
To further encourage account ownership among the unbanked, the BSP approved in 2018 
the framework for banks to offer a basic deposit account (BDA). Allowing for the BDA 
addresses the barriers oft-cited in owning an account, which include high costs, lack of 
money, inability to meet documentary requirements, and perceived low utility of a bank 
account. 
 
Allowing Agent Banking 
 
Another policy to serve the unmet need for financial services amidst the country’s 
unevenly scattered geography is the introduction of cash agents. With prior BSP 
authorization, cash agents were introduced to make bank services physically accessible to 
Page 11 of 38 
more clients. These agents are retail outlets (e.g., convenience stores, pharmacies, 
pawnshops) where one can avail banking services (e.g., apply for a bank account including 
BDA, cash deposit and withdrawal, fund transfer, bills payment). Cash agents enable 
banks to leverage on innovative digital solutions to serve a wider client base, particularly 
in the low-income and rural areas where there is limited commercial incentive to establish 
a full branch or even a micro-banking office.   
 
Launch of the National Retail Payment System (NRPS) 
 
For this reason, the NRPS was a landmark initiative that was launched in December 2015 
to reform the country’s retail payment system and accelerate digital payments in the 
country. It is a policy and regulatory framework whereby the BSP provides regulatory 
oversight fundamentally in the form of policy direction to the PSPs. The framework also 
requires interoperability among the PSPs by creating multilateral arrangements which are 
referred to as automated clearing houses (ACHs). These ACHs provide their detailed rules 
for clearing and settlement. 
 
To be interoperable, banks and non-bank e-money issuers should be interconnected 
through a clearing switch operator (CSO) that is designated by the ACH participants. The 
NRPS framework minimizes the credit exposure of the ACH participants to the settlement 
bank by requiring the settlement of the participants’ net clearing obligations in central 
bank money. Hence, the net clearing positions determined by the CSOs are all settled 
through the country’s real time gross settlement (RTGS) system, also known as PhilPaSS. 
 
Currently, two ACHs have been established: 1) the Philippine EFT System and Operations 
Network (PESONet)6 for batch EFT credit payment scheme; and 2) InstaPay7  for real-time 
low-value EFT credit push payments. The PESONet went live in November 2017 and serves 
as an alternative to the paper-based cheque system. Meanwhile, the InstaPay was 
launched in April 2018 and is utilized mainly by individuals.  
 
Regulatory and Policy Support 
 
On the regulatory front, the BSP sought the proper balance to ensure that innovations are 
encouraged while consumer protection is upheld and threats to financial stability are 
mitigated. To ensure that banks responsibly integrate emerging technologies in their 
operations, the BSP issued prudential measures that included licensing requirements for 
institutions intending to offer electronic services; outsourcing policy for those that engage 
third party services such as infrastructure providers; as well as business continuity 
management and information security management for all BSP-supervised institutions in 
                                                             
6  The PESONet or the Philippine EFT System and Operations Network is the first ACH created under the NRPS. 
It is a batched electronic funds transfer (EFT) credit payment stream, which can be considered as an electronic 
alternative to the paper-based check system. Under the PESONet ACH, the payment instructions are 
processed in bulk and cleared in batches. Each payee receives the full value that is transferred to his account 
within the same banking day, provided the payment instruction was sent within the cut-off time of the payor’s 
bank or e-money issuer. 
7  The InstaPay is a real-time EFT credit payment stream for retail transactions up to fifty thousand pesos 
(Php50,000). Under the InstaPay ACH, the payment instructions are processed in real-time, thereby allowing 
a payee to immediately receive the full amount transferred to his account. With this pioneering feature, the 
InstaPay EFT facility is designed to facilitate small value and urgent payment needs. 
Page 12 of 38 
light of the vulnerabilities of electronic facilities to disruption brought about by cyber 
attacks, electronic fraud, malicious penetration, and other internal and external threats.  
 
The BSP also issued regulations that support an innovative, sound, and proportionately-
regulated e-money ecosystem where e-money issuers and their networks are given 
flexibilities to achieve a massive reach to Filipinos, particularly the rural area dwellers. 
 
Early Gains in Digital Payments 
 
More people are now doing transactions online 
 
The recent pandemic has drastically increased the Filipino’s usage of the internet for e-
commerce transactions, owing to the community quarantine policies enforced by the 
government to prevent the spread of the virus. The April 2020 Digital Statshot report of 
We Social and Hootsuite found that 64% of Filipino internet users reported spending more 
time on social media, while 23% of users shared that they are spending more time 
shopping online.8 These developments indicate that digital payments have a huge 
potential for acceptance as the primary mode of payment, with majority of the population 
already internet savvy and the noted preference in using the internet for purchasing 
goods and services.  
 
Among all types of accounts, e-money account penetration posted the most remarkable 
growth, increasing to 8% in 2019 from 1.3% in 2017. In comparison, bank account 
penetration barely grew to 12.2% in 2019 from 11.5% in 2017. On par with banks are 
microfinance NGOs where account ownership stood at 12.1%, a considerable increase 
from 8.1% in 2017. 
 
Figure 12. 
 
           Source: 2019 FIS Report 
                                                             
8  COVID-19 accelerates digital adoption in PH, 13 May 2020, Inquirer.Net 
Page 13 of 38 
 
More people owning an account are using them for payment transactions 
 
Although account ownership remains limited, more of those owning an account have used 
their account for making payment transactions. While saving remains the primary reason 
for opening and using an account, the share of accountholders who use their account for 
doing payment transactions more than doubled to 39% in 2019 from 18% in 2017. 
 
 
There are already initial gains under the NRPS framework as can be gleaned from the 
increase in transactions under PESONet and InstaPay. As of end-December 2019, the 
volume of PESONet transactions was up by 253% from November 2017. In terms of value, 
PESONet transactions have increased to P127.21 billion for the month of December 2019, 
higher by 141% compared to November 2017 (see Figure 13).  As of end-2019, there are 
55 financial institutions participating in the PESONet. Similarly, the volume and value of 
transactions are on the rise in the InstaPay ACH. As of December 2019, the volume of 
InstaPay transactions had increased exponentially to 5.47 million from just 1,740 in April 
2018. The total value of InstaPay transactions reached P40.1 billion in December 2019 from 
P20,000 in April 2018 (see Figure 14). As of end-2019, there were 45 financial institutions 
participating in the InstaPay that allow their clients to send and receive funds, of which  
13 financial institutions initially offered to only receive funds for their clients. 
 
Figure 13. Volume and Value of Transactions at PESONet: PESONet transactions have been increasing. 
 
 
                Source: BSP-PSOD 
 
Figure 14. Volume and Value of Transactions at InstaPay: Similarly, InstaPay transactions are on the rise. 
 
                                  Source: BSP-PSOD 
Page 14 of 38 
 
At the forefront of digitalizing payments to government is the EGov Pay, an electronic 
payment facility that allows individuals and businesses to pay taxes, permits, fees, and 
other obligations to the government.  This facility makes use of the PESONet as the 
payment rail. To use the EGov Pay, the payers have to access “Linkbiz”, a payment portal 
which is hosted by the Land Bank of the Philippines (LBP). 
 
By participating in the EGov Pay as billers, government institutions can efficiently collect 
revenues, which are crucial to their delivery of public and social services.  Moreover, the 
government in general can curb revenue leaks through efficient collection means, better 
audit trail, and enhanced transparency. 
 
From only two (2) government institutions enrolled in the facility when it was launched 
last November 2019, the list has substantially expanded to 60, with the Bureau of Internal 
Revenue (BIR), Department of Trade and Industry (DTI), Philippine National Police, 
Overseas Workers Welfare Administration, Environment Management Bureau, and 
various local government units (LGUs) leading the roster. A substantial number of 
government institutions are expected to be on board the EGov Pay in the near to medium 
term. 
 
The BSP’s issuance of a policy requiring adoption of a National QR Code Standard was a 
turning point in the country’s digital transformation journey. Leveraging on the efficiency, 
safety, and affordability of the QR technology, this regulation bears far-reaching benefits 
by enabling micro and small merchants to accept digital payments which were meant for 
well-established businesses for the longest time. 
 
The National QR Code Standard dubbed “QR Ph” was launched in November 2019, with 
the Person-to-Person (P2P) use case made available first, to be followed by the Person-
to-Merchant (P2M) use case which is scheduled to go live in the year 2021.  The QR Ph-
enabled P2P transactions almost doubled in just over a month from its inception. While 
the volume and value of the P2P transactions are still building up, both demand and supply 
of QR-enabled payment services show promising trends. 
 
On the other hand, the P2M QR Ph will empower small economic actors to take part in 
the digital payments ecosystem, and more importantly, in the formal financial system. 
They can build financial profiles with their recurring digital payment transactions, enabling 
their banks and electronic money issuers to design further financial services such as 
savings, loan products, and investments that suit their specific needs. 
 
 
 
Page 15 of 38 
Broader Challenges to the Development of a Digital Payment Ecosystem and Financial 
Inclusion 
 
Shifting mindsets towards utilizing digital payments 
 
A 2015 BTCA country diagnostic using 2013 data found that of the 2.5 billion payments, 
corresponding to USD74 billion, made by Filipino adults in a month, the share of digital 
retail payments by volume and value was only 1% and 8%, respectively. While several  
e-channels had been made available for payment transactions at the time, it was notable 
that the country continued to be cash- and cheque-dependent.  
 
The study explained that the shift to a mainly cash-lite economy undergoes three stages: 
(1) first is the shift of one-to-many or bulk payments given the persistence of the use of 
checks for salary payments and government payments; (2) second is the shift of many-to-
one or remote bill payments, which was being used for high value pension and insurance 
contributions and loan repayments but not yet for tax or supplier payments; (3) third is 
the shift of one-to-one payments, including person-to-business payments, which needed 
a lot of progress in the formal and informal sectors. Figure 15 below illustrates how a 
country may progress through these different trajectories which in the Philippines need 
not occur sequentially, as the three stages may even happen simultaneously. 
 
 
Figure 15. 
 
Shifts between stages from cash heavy to cash lite 
 
     Source: BTCA Philippine Country Diagnostic (July 2015) 
 
Key lessons from the same report identified several barriers to e-payments adoption in 
the Philippines, as follows: (a) inadequate legal infrastructure and/or regulatory 
framework that would provide certainty for stakeholders and underpin the digital 
ecosystem investments needed for digital payments to take hold, particularly in the 
private sector; (b) utilization of e-banking as a foundation to further digitization, 
considering that many Philippine banks offer e-banking services, and are building 
infrastructure and confidence in digital transactions; (c) high barriers to enter the banking 
system, such as high fees for e-banking services relative to cash and paper-based services, 
requirements to maintain minimum account balances, and onerous identification 
requirements that individuals from lower socio-economic backgrounds may struggle to 
meet; (d) lack of trust and concerns about fraud that revealed the need for education and 
confidence-building measures, as well as accessible and effective recourse mechanisms 
Page 16 of 38 
for retail payments; (e) large retailers can potentially play a leading role in encouraging 
and educating consumers about the benefits of digital payments.  
 
The Digital Divide 
 
While locality and geography do not seem to be a major barrier to the usage of financial 
services, they do create a digital divide in terms of smartphone ownership and access to 
the internet. Disparities in income is another major contributor to the digital divide, as 
those residing in rural areas and regions outside Metro Manila and belonging to lower 
socio-economic classes are at a disadvantage. In fact, the 2019 FIS found that for those 
who do not have an account, lack of enough money, remains a recurrent and the topmost 
reason for not having an account, as reported by almost half (45%) of the unbanked. 
 
These findings suggest that economic growth and bringing economic development to the 
countryside are crucial elements to achieving a digital payment ecosystem that works 
towards financial inclusion. Economic growth raises incomes, and this is important to 
addressing the affordability issue to owning an account. In turn, having the money to open 
and maintain an account is the first step towards getting into digital payments. As such, 
digital connectivity is crucial to realize the potential of digital financial services. Poor 
internet connection and infrastructure, if left unaddressed, will continue to hinder 
advances in digital finance. This suggests that making fast internet connection affordable 
and widely available is a crucial enabler for digital financial services to flourish. 
 
State of access and quality of internet connectivity 
 
With digital payment transactions expected to gain traction, the structural support 
necessary to its seamless application should be provided by an infrastructure network that 
ensures security, reliability and efficiency. These infrastructure support, similar to roads 
and bridges, will facilitate the interconnection and inter-adoption of digital payments as 
the payment of choice in our growing economy. A recurrent and key challenge to the 
mainstreaming of digital payments is the broader challenge of lacking fast and reliable 
internet connectivity in the country.  
 
In a recent study, the 4G speed in the Philippines ranked 4th slowest of 88 countries in 
OpenSignal’s 2018 State of LTE and recorded the poorest overall mobile video experience 
of 69 countries in OpenSignal’s 2018 State of Mobile Video. At the same time the fixed 
broadband service costs consumers 7.1% of gross national income per capita per month—
well above the 5% affordability threshold recommended by the International 
Telecommunications Union. Based on the same study, three technologies appear to be 
appropriate and possible for the Philippines to have fast and reliable internet, mainly:  
1) Fiber to the Premises with Gigabit Passive Optical Network; 2) Fixed mobile substitution 
with 5G; and 3) Low earth orbit satellite networks. 
Page 17 of 38 
III. The Digital Payments Transformation Roadmap9 
 
 
 
 
 
 
 
 
                                                             
9  The key milestones set for the Roadmap initiatives are attached as Annex A. 
Page 18 of 38 
Page 19 of 38 
 
IV. The Three Pillars of Digital Payments Transformation 
 
The rationale for the goal to boost e-payments usage in the country is not only intuitive 
but also based on empirical evidence. Different studies have shown that an increase in  
e-payments translated to economic growth. 
 
An APEC study, the “APEC E-Payment Readiness Index: Ecosystem Assessment and Status 
Report,”10  was undertaken to assess the level of readiness and determine the potential 
of the 21 APEC economies to engage in, adopt and reap the broad range of economic and 
societal benefits that e-payments hold. The report illustrated the linkages between  
e-payment penetration and economic growth. Using sample data from five (5) APEC 
economies, the study showed that a 1% change in online retail sales is associated with at 
least a 0.1% growth in GDP per capita among the five (5) APEC economies. 
 
In another study of a cross-section of 50 countries,11 it was shown that increasing the 
existing share of e-payments in a country by a margin of just 10% will generate an increase 
of 0.5% in consumer spending. The study also showed that e-payment networks have the 
potential to provide cost savings of at least 1% of GDP annually over paper-based systems 
through increased velocity, reduced friction and lower costs. 
 
With the valuable insights from these studies and customizing these to the unique 
payment ecosystem of the country, we have identified the three (3) critical areas that the 
Philippines should focus on to successfully bring the cash-heavy Philippine economy to a 
cash-lite economy. The BSP Digital Payments Transformation Roadmap is thus anchored 
on these three pillars: (i) digital payment streams, (ii) digital finance infrastructure, (iii) 
digital governance standards.  
 
First, the digital payment streams embody the BSP’s key initiatives of creating compelling, 
large scale digital payments use cases. These priority streams act as catalysts for building 
an inclusive digital finance ecosystem by demonstrating the benefits, safety, and reliability 
of the country’s retail payment system. Enabling consumer use cases will boost consumer 
awareness, thereby increasing the acceptance and use of digital payment platforms.  
 
The further development of digital finance infrastructure is critical as secure, reliable, 
efficient, and interconnected systems are necessary to facilitate smooth payment 
transactions. The adoption of new platforms and solutions that will bring down the cost 
of providing varied digital products and services and allow for their wider distribution 
across the archipelago will speed up the digital payments transformation process. 
Reductions in cost and improvements in the speed of delivery are key to enhancing 
customer preference for adopting digital modes of payment across the various use cases.  
 
                                                             
10 The report was developed through the support of PayPal and was a joint study by the Australian APEC Study 
Centre at RMIT University and TRPC, a technology consulting and research firm based in Singapore. 
11 The Virtuous Circle: Electronic Payments and Economic Growth, based in part on research performed by 
Global Insight, an econometric forecasting agency. The paper may be accessed at 
http://www.visacemea.com/av/pdf/eg_virtuouscircle.pdf. 
Page 20 of 38 
Of course, innovation is not without risk. For this reason, the growth in payment streams 
and the creation of new systems must be underpinned by sound digital governance 
standards that are aligned with global best practices and standards. An appropriate 
regulatory framework should be in place to ensure that the provision of digital products 
and services is covered by an adequate governance process, meets minimum technical 
expectations, and safeguards the integrity, security and privacy of customer data.      
 
A. Digital Payment Streams 
 
Five years ago, the BSP officially launched the NRPS as the foundational regulatory 
framework for modernizing the country’s retail payment system which led to the 
creation of the Instapay and PESONet, the critical rails of digital payments. With NRPS 
having laid the groundwork for interoperable and real-time small value fund transfers, 
the next imperative for promoting adoption of digital payment is to build its use cases 
for transactions between individuals, businesses and the government. With payors 
and payees being persons, businesses and the government, a wide range of digital 
payment use cases may be envisioned (see Figure 16).  
 
Figure 16.  
 
Source: BTCA Philippine Country Diagnostic (December 2019) 
 
To determine which payment use cases can potentially be the drivers for digital 
payment growth in the country, the largest and most relevant payment use cases were 
identified.  The following section describes the identified payment use cases and how 
their digitization can positively contribute to wider digital payment adoption.   
 
 
 
Page 21 of 38 
i. Person to Government (P2G) and Business to Government (B2G) 
 
Significant savings in cost, time and effort can be had from the digitalization of 
payments of persons and business to the government. These transfers of funds 
cover payments of taxes, fees, loan amortizations and social welfare contributions, 
representing a key area for potential growth in digital payments. While digital 
business tax payments have risen significantly due to the mandatory use of the 
Electronic Filing and Payment System by big businesses, only 1% of payments of 
taxes and fees to local governments are made through digital means. Various 
government units are currently at different levels of readiness in terms of being 
able to accept digital payments, and there is a need for stronger coordination 
among agencies to increase capacity.  
 
ii. Person to Business (P2B) 
 
P2B payments hold much potential for digitalization. There are over 100,000 
merchants and millions of individuals who are equipped to pay digitally. However, 
digital payments in this area represent only up to 12% of the transactions, and are 
particularly negligible among micro, small and medium enterprises (MSMEs), 
which comprise the majority of merchants. Moreover, the BTCA estimates that 
Filipinos make around 65-75 million utility payments every month, yet less than 
5% of these are made digitally, with the rest done OTC in cash. Moreover, given 
the small average utility payment value (USD 10-30), transaction costs may be 
higher than the bill amount. There is thus a compelling argument for making the 
shift to digital P2B payments using digital wallets and online banking.    
 
iii. Person to Person (P2P) 
 
P2P payments such as remittances and payments to sole commercial proprietors 
have hugely benefited from recent digital payment innovations brought about by 
the NRPS, agent-banking and online banking solutions. These innovations have 
generated efficiencies in cost, time, and effort, as well as security from theft and 
fund leakages. However, the BTCA study shows that 80% of all remittances 
continue to be made OTC in cash, resulting in high cost and lower productivity 
brought about by the manual payment process. 
 
 
iv. Business to Business (B2B)  
 
B2B payments, or supplier payments, hold much promise given their large volume 
and high transaction value, yet almost 85% of all supplier payments by volume are 
made in cash. Digitalization of B2B payments through payment gateways presents 
an opportunity for tremendous efficiency gains, and may encourage business 
expansion and innovations. 
 
 
 
Page 22 of 38 
 
v. Business to Person (B2P) 
 
There is still much room for growth in the B2P payment stream, as only large and 
formal industries pay salaries and wages digitally. Up to 82% of salary payments 
by volume are still made through cash and checks. Much greater progress has been 
made in the digital disbursement of consumer loans, which accounts for 96% of 
disbursements by volume. 
 
vi. Government to Government (G2G) 
 
As one of the biggest payors in the economy, the government is in a strategic 
position to transfer payments digitally. Indeed, the government currently leads the 
way in digital payments, with those in the G2X stream having risen from 54% in 
2013 to 64% in 2018. The further digitization of transfers from the national 
government to LGUs, as well as of social welfare contributions and payments for 
the procurement of common use items, can lead to a reduction in cost and the 
more efficient flow of funds.  
 
vii. Government to Business (G2B) 
 
G2B payments, consisting of procurement and supplier payments, as well as 
payments for utilities, are already largely digital in nature, with an estimated 90% 
of both the volume and value of monthly transactions made through digital means. 
The further digitalization of government payments for the purchase of goods and 
services can lead to savings of up to an estimated USD100 million annually.  
 
viii. Government to Person (G2P) 
 
Digital payment services help the government to promptly deliver social services 
through the quick and safe means of disbursement of funds to concerned 
stakeholders. While salary payments by the government are currently already 
largely digital in nature, further strides can be made in the digitalization of social 
transfer payments such as pensions, social security benefits, housing loan 
proceeds, and the conditional cash transfer program Pantawid Pamilyang Pilipino 
Program (4Ps). Although 45% of social benefit transfers are currently digitized, 
majority of these transfers are carried out through limited-purpose cash cards that 
can only be used by beneficiaries to withdraw funds from an ATM. These cards 
cannot be used directly for payments or transfers.  
 
The BTCA estimates that digitizing welfare payments and converting cash cards 
into basic accounts would already provide up to 11 million individuals with their 
first digital store of value. In fact, with the implementation of various levels of 
community quarantine over the country, the Social Security System (SSS) was able 
to disburse through PESONet the financial assistance under the SSS Small Business 
Wage Subsidy Program to over 3 million employees of MSMEs that have been 
affected by the pandemic. 
Page 23 of 38 
 
In making digital payments available, affordable and convenient for any of the above 
transactions, owning an account – which is a basic requirement for digital payments – 
becomes a necessity not only for those with extra money to save but for anyone who 
sends, receives and pays money, no matter how small.  
 
The BSP is involved in a wide range of initiatives that aim to improve the digital 
payment experience and grow the payment streams. These initiatives are largely 
supportive of the priority payment use cases identified in the BTCA, which include: 
 
Figure 17.  
 
 
Existing initiatives that support each of these payment streams12 are as follows: 
 
Payments to merchants (P2B) 
 
QR Ph P2M via InstaPay. QR Ph is the national QR code standard designed to 
transform the fragmented QR-driven payment services into interoperable payment 
solutions.  The P2M QR is the second part of QR implementation in the country.  By 
scanning the biller or merchant’s QR which shall conform to the national QR code 
standard, customers can make payments without going through the hassle of keying 
in the account details of the biller/merchant. The use of QR Ph for payments to 
businesses (P2B) will eliminate the need for merchants and customers to maintain 
several accounts and for merchants to display numerous QRs. The rulebook for the 
implementation of the standard is currently under development. The initiative is 
likewise expected to bolster periodic utility payments. 
 
                                                             
12 Several initiatives are not limited to expanding one specific payment stream, but also support other use cases. 
Page 24 of 38 
The initiative shall also include a pilot implementation of QR codes for tricycle drivers 
and market vendors. The program will help digitalize P2P payments in the transport 
sector. It will also facilitate financial inclusion, as participation will necessitate the 
creation of transaction accounts that users can employ for personal digital payment 
transactions. 
 
Zero fees on micro transactions. The BSP is working with the Philippine Payments 
Management, Inc (PPMI), the recognized payment system management body, to 
reduce the costs of doing digital payments to incentivize the consumers to convert 
cash-based transactions into digital form. The nature and amount of transactions that 
would qualify as micro shall be determined by the BSP in consultation with the 
industry.  This initiative shall make payments to micro enterprises more appealing 
(P2B), and also support remittances (P2P). 
 
Periodic utility payments (P2B) 
 
Direct Debit via Batch EFT Credit ACH. At present, bills payments are largely push 
transactions, with funds manually transferred by the payors as due dates arrive. 
Enabling direct debit will allow customers to better manage their recurring payments 
by simply authorizing the payees to pull funds from the account of the payors.  On the 
part of the payees, meanwhile, having a direct debit arrangement would help 
streamline collection efforts and provide assurance that expected cash inflows are 
realized on time. The BSP is working with the PPMI on the implementation of the 
initiative, which will also facilitate payments to suppliers (B2B). 
 
Bills Pay via Real Time Low Value EFT Credit Automated Clearing House (ACH). At 
present, fragmentation and inefficiencies are observed in the bills collection process.  
This initiative aims to ensure that a biller can collect from payers with different 
payment service providers, increasing convenience for all involved. The BSP is working 
with the PPMI  on the implementation of the initiative. The Bills Pay initiative shall not 
only facilitate utility payments, but shall also support the expansion of payments to 
merchants (P2B) and payments to suppliers (B2B). 
 
Remittances (P2P) 
 
Multiple batch net settlement (MBNS) of PESONet transfers. This initiative will allow 
for faster clearing and settlement of PESONet transactions. With multiple multilateral 
net clearing and settlement cycles within a banking day, users need not wait for the 
end-of-day batch processing of the transactions to receive fund transfers. This 
represents a significant improvement in efficiency and will increase the convenience 
for users. The BSP is collaborating with the industry on the development of rules and 
operating guidelines for the implementation of MBNS. This initiative will provide 
significant benefits in other payment streams as well, increasing the efficiency of 
periodic utility payments (P2B), payments to suppliers (B2B), and social benefit 
transfers (G2P). 
 
 
 
Page 25 of 38 
Social benefit transfers (G2P) 
 
The BSP is providing technical assistance to the Department of Social Welfare and 
Development (DSWD) to ensure the use of full-service transaction accounts for the 
distribution of cash grants under the 4Ps. The digitalization of these cash transfers 
will further expand G2P streams. While the DSWD currently distributes the cash aid 
through a cash card, this cash card does not represent a transaction account that may 
be used for saving, making retail and bills payments, and transferring funds for other 
purposes.  
 
The initiative aims to replace the existing 4Ps cash cards with full-fledged transaction 
accounts and provide beneficiaries with increased security, lower transaction costs, 
and access to retail and utilities payment options. The transaction accounts will also 
provide beneficiaries with an account that can be used to save and invest, thus 
promoting responsible use of money. Apart from broadening the use cases for digital 
payments, the coming to fruition of this initiative will increase the number of Filipino 
adults with bank accounts, as the Program currently covers 5 million households. 
 
The BSP is also promoting the use of digital payments channels for the 
implementation of COVID-19 support measures, specifically for MSMEs and the 
informal sector. Among the activities in this area are the engagement of legislators, 
the Department of Finance, the National Economic and Development Authority and 
the Department of Budget and Management on the institutionalization of the use of 
transaction accounts for COVID-19 measures. The initiative also involves the provision 
and facilitation of technical assistance for the government agencies that may use the 
transaction accounts in the distribution of cash assistance and loan proceeds to target 
beneficiaries. 
 
This initiative will promote the digitalization of G2P payments and establish a secure, 
transparent and cost-efficient way to distribute cash assistance to MSMEs and 
workers in the informal sector. It will also facilitate financial inclusion among MSMEs, 
workers and poor household beneficiaries targeted for COVID-19 financial 
relief/assistance efforts, since the receipt of the said monetary proceeds will entail the 
opening and owning of a transaction account. The second tranche of the Social 
Amelioration Program (SAP) subsidy is targeted to cover approximately 12 million 
families.  
 
Apart from the above initiatives, the BSP is also engaged in other projects that are 
geared toward the expansion of various use cases for digital payments, and the growth 
of digital payment streams more generally. 
 
A partnership has been established with the Department of Labor and Employment 
(DOLE) on the payment of wages through transaction accounts. This partnership aims 
to leverage organized labor and employer groups for the promotion of payment of 
private sector wages thru transaction accounts and the implementation of an 
awareness campaign to educate wage earners on the uses and benefits of having a 
transaction account . On 3 August 2020, the DOLE issued Labor Advisory No. 26 series 
Page 26 of 38 
of 2020 encouraging employers to pay wages and other monetary benefits via 
transaction accounts. 
 
The initiative shall increase the digitalization of B2P payments, lowering transaction 
costs and payment leakages, ensuring mutual protection for both employer and 
worker, and promoting an easier and more convenient method of transferring funds. 
The ownership of accounts by workers will also pave the way for the creation of a rich 
digital footprint that can be referenced by formal lenders. This will aid workers in 
establishing a record of payment and obtaining credit. Given the large number of wage 
earners and salaried workers in the Philippines (26.5 million based on 2018 Current 
Labor Statistics), the shift to the payment of wages through transaction accounts will 
help increase the share of Filipino adults with accounts and broaden the use of digital 
payments. 
 
The BSP is also working with the BTCA to update previous diagnostic studies through 
enhancements to the measurement models to allow a more efficient and timely 
measurement and monitoring of e-payments targets (i.e., volume and value), as well 
as forecast the structural changes resulting from the COVID-19 pandemic.  
 
Finally, the BSP will launch a nationwide Consumer Payments Survey13 that will be 
helpful in monitoring the progress of the NRPS initiatives, for macrofinancial 
surveillance, financial inclusion research and any future empirical study on the impact 
of digital payments on the macroeconomy and the banking system. The objectives of 
the initiative include the: (1) collection of information on the awareness, ownership 
and usage of the different payment instruments by Filipino consumers; (2) 
identification of factors that influence their preference for these payment 
instruments/methods; (3) establishment of the baseline for tracking the impact of 
NRPS framework, particularly the volume and value of consumers’ retail payments; 
and (4) provision of inputs for policy formulation in the area of digital payments. 
 
Impact on Currency Production and Projection 
 
Physical currency has associated production and storage costs. Apart from the cost of 
printing/minting, storage cost is also significant, as vaults are necessary to secure cash. 
In contrast, e-cash is convenient and can be stored in digital form without the need 
for physical storage facilities. Moreover, rising demand for physical currency has 
outpaced the BSP’s production capacity, leading to the acquisition of outsourced 
finished currency to meet the economy’s requirements. 
 
In view of recent developments, the BSP has embarked on an in-depth study on the 
issuance of central bank digital currency (CBDC)14 and its effect on monetary policy 
and money supply.  Literature suggests that CBDC could provide an avenue for a stable 
unit of account, efficient medium of exchange, and a secured store of value. It could 
                                                             
13 A BSP-wide Consumer Payments Survey (independent of the nationwide Survey) will also soon be rolled out. 
The results will be used as inputs for the formulation of policies and programs to further boost the knowledge 
and use of digital payments of BSP employees. 
14 CBDC refers to the digital form of fiat currency issued by country’s monetary authority.  
Page 27 of 38 
also offer significant savings in printing/minting physical currencies, as well as 
minimize the possible spread of bacteria/viruses (e.g., COVID-19). The issuance of 
CBDC may lead to the reduction in the demand for physical currency, consistent with 
the BSP’s thrust towards a cash-lite economy. This would lead to a reduction in the 
production of physical currency and a decline in related costs. 
 
 
B. Digital Finance Infrastructure 
 
The BSP recognizes that building a more robust digital finance infrastructure is crucial 
for financial inclusion. Strengthening the financial infrastructure is central to 
increasing cost-efficiencies and managing risks to enable new means of innovative 
financial services delivery capable of reaching the vulnerable sectors of economy. In 
this regard, the BSP is pursuing key infrastructure development initiatives towards 
sustainable expansion of the scope, scale and reach of digital financial services.  
 
• Philippine Identification System (PhilSys). The BSP continues to support the 
development and implementation of PhilSys to promote financial inclusion 
and innovate digital financial services. Pursuant to Republic Act (R.A.) No. 
11055 or the Philippine Identification System Act, the National ID is a unique, 
biometric-based, non-transferrable ID that will help ease know-your-customer 
(KYC) rules and ensure fool-proof identity in opening a transaction account. 
The PhilSys can drive financial inclusion by streamlining and helping reduce 
customer onboarding costs.  
 
The BSP, as the chair of the PhilSys Policy and Coordination Council (PPSC) 
Inter-Agency Committee Sub-Group on Use Cases and Authentication, 
spearheads the crafting of strategy to facilitate the conduct of PhilSys enabled 
electronic-KYC or e-KYC. The PPSC also ensures that financial service providers 
(FSPs) including banks and other financial institutions will form part of the 
PhilSys ecosystem. This will allow the FSPs to lower onboarding and factor 
authentication costs by leveraging on the National ID’s digital authentication 
features such as biometrics. In addition, building on this digital identity, FSPs 
can develop other applications to offer payments, savings and micro-credit 
services to underserved clients. 
 
Moreover, the BSP will be producing the blank cards for the National ID for five 
years15. 
 
• 
PhilPaSSplus. To better service more and more financial transactions, the BSP 
has endeavored to replace the 17-year old PhilPaSS with a next generation system.   
With comprehensive functionalities, the PhilPaSSplus shall settle larger 
numbers, varying types and complexities of financial transactions using a single 
platform.  Using the latest technology, PhilPaSSplus shall significantly enhance 
risk reduction, security levels, business continuity provisions, liquidity 
                                                             
15 Pursuant to the Memorandum of Agreement entered into between the BSP and the Philippine Statistics 
Authority (PSA) in October 2019. 
Page 28 of 38 
management, and the generation of data and information.  As the 
communication message format is standardized using the ISO 20022 
international standard, the country’s payment systems shall be more 
interoperable across the country and even with payment systems in other 
jurisdictions. 
 
• Open Banking. The BSP is cognizant of the benefits of moving towards an open 
banking ecosystem, a data-sharing scheme, which espouses consent-driven 
data portability, interoperability and collaborative partnerships among 
incumbent financial institutions and new third party players. Through open 
banking, third parties such as fintechs will be allowed access to financial 
information needed for developing innovative applications and services.  
 
The BSP recognizes the importance of establishing credit infrastructures in addressing 
information asymmetries between providers and users of financial services. Credit 
information sharing presents opportunities for reduced cost of lending and improved 
service delivery thereby benefiting the low-income market segments. Since the design 
and development of these infrastructures will explore a platform-based 
implementation strategy, these can connect to the country’s digital identity and 
payment systems.  
 
• Credit Risk Database (CRD). The CRD, a credit enhancement tool pioneered in 
Japan, uses financial statement information, non-financial data (e.g., 
industry/sector, location) as well as default data of borrowers to build a 
statistical scoring model predicting the creditworthiness of small and medium 
enterprises (SMEs). It allows for the flexible use of analytical output based on 
anonymized data to be provided by the participating members. This 
development in credit infrastructure is expected to lower the cost of lending 
and improve speed of service delivery. The CRD initiative is seen to broaden 
SME access to finance by promoting the shift from collateral based to risk-
based lending. 
 
• Movable Collateral Registry. The BSP is actively supporting the 
implementation of the Philippine Property Security Act (PPSA), particularly the 
online movable collateral registry. Under the PPSA, the Land Registration 
Authority is mandated to develop and implement such registry as part of the 
secured transactions framework. The PPSA aims to promote access to MSME 
finance by facilitating the acceptance of movable assets as collateral for loans. 
The BSP is set to issue supporting policies and guidelines to promote adoption 
of the PPSA. The online collateral registry is viewed as an important credit and 
digital infrastructure to support broader inclusion goals for MSMEs. 
 
• Study on Digital Supply Chain Finance (SCF). Another initiative which aims to 
promote greater financial inclusion among MSMEs is the development of a 
dynamic SCF market through digital platforms. The use of digital platforms is 
recognized as a critical piece for a successful SCF program, along with an 
enabling regulatory environment around electronic invoicing, electronic 
signatures, and secured transactions, among others.  The digital platforms can 
Page 29 of 38 
be developed and run by different actors, including a lead firm, a lending bank, 
a third party player, the government, and business associations.   
 
• Agent Registry. Agents are considered critical enablers of an inclusive digital 
finance ecosystem, facilitating onboarding of the unbanked and their 
transition to digital payments. The agent registry is a digital solution which 
aims to capture all types of agents (e.g., bank cash agent, remittance agent, 
electronic money issuers, and cash-out/in partners) in one consolidated 
database. The said platform will be capable of (i) assessing the depth of 
geographic penetration and concentration of agents, (ii) monitoring agent 
activity in terms of volume and value of transactions, and (iii) producing a web-
based directory of authorized agents that will be made accessible to the public 
through the BSP website. 
 
Once built and developed, the agent registry’s rich data collection may be used 
in the future as part of a data stack which may be flexibly combined to build 
useful digital platforms. These platforms may further enable the evolution of 
various innovative digital finance solutions.   
 
To address the broader challenge on the state of critical digital connectivity in the 
country, the BSP strongly supports the Information and Communication Technology 
Policy (ICT) policy reforms that aim to address digital connectivity gaps, as well as 
broad efforts to promote fast and reliable internet connectivity fostering further 
financial inclusion. In particular, the BSP sees strong potential in the use of satellite 
communications technology in delivering internet connectivity. This is being explored 
as a potential solution for improved financial access particularly in hard-to-reach rural 
areas. Toward this end, the BSP is supporting the following proposed reforms: 
 
• Open Access in Data Transmission Act. The bill aims to modernize the 
country’s telecoms regime which is still governed by a law that was enacted at 
a time when internet and data services were not yet commercially available. 
Among others, a major amendment of the proposed bill is to remove the 
requirement to obtain congressional franchise and streamline the registration 
process to open up the broadband industry to more players and attract much 
needed investment in data transmission infrastructure. 
 
• Amendment to Executive Order (EO) No. 467. Signed by former President 
Fidel V. Ramos as a national policy for the operation and use of international 
satellite communications in the country, the EO is found to be restrictive as it 
only allows enfranchised entities duly authorized by the National 
Telecommunications Commission (NTC) to access international satellite 
systems. The amendment aims to liberalize access to satellites for internet 
connectivity which will help address digital infrastructure gap in the 
countryside. Currently, only telecom companies with congressional franchises 
can provide satellite technology services. 
 
 
Page 30 of 38 
C. Digital Governance and Standards 
 
Digital governance and standards aim to promote responsible and strategic use of 
digital assets by BSP-supervised entities to ensure optimal benefit for the financial 
system and the transacting public.  Industry-level standards aim to ensure regulated 
entities deliver minimum expectations for consumer data protection, cyber resilience, 
and interoperability. 
 
The BSP is undertaking the following initiatives to support increasing payment 
digitalization:  
 
Open Banking and Application Programming Interfaces (API) Standards. As the BSP 
works toward enabling an open banking ecosystem, it likewise understands the 
associated risks, particularly with respect to data security and privacy. In this regard, 
a policy on open banking will be developed to lay down the technical, security, and 
governance standards to be observed by supervised entities intending to publish open 
data APIs.  
 
The adoption of open banking regulations is expected to boost consumer confidence 
in sharing their data with BSP-supervised financial institutions (BSFIs) and accredited 
third party providers/partners. Enabling responsible data sharing schemes will 
facilitate collaborations to enhance the design of financial products and services, as 
well  as alleviate some of the pain points experienced by low-income customers. In 
particular, such arrangement can address the high costs associated with onerous 
customer due diligence procedures that serve as a barrier to financial services access.  
 
Data Governance and Ethical Use of Data Policy. The BSP is cognizant of the 
importance of data as an asset and a fundamental component of its capabilities in 
providing data-driven policies and decisions. In this regard, a policy on data 
governance for and the ethical use of data by supervised entities will be crafted. The 
issuance will be geared toward ensuring that all data and information obtained and 
passing through different digital channels will be handled ethically and that all 
participants will be bound by key data governance principles. The policy will also 
incorporate BCBS principles on effective risk data aggregation and risk reporting to 
support decision making for enterprise-wide risk management. 
  
Adoption of the ISO 20022 International Messaging and Communication Standard.  
In 2019, the BSP’s Monetary Board approved to mandate the required adoption of the 
ISO 20022 standard to be implemented by all financial institutions and third party 
payment service providers that transmit to the RTGS electronic instructions in their 
systems and/ or infrastructures used to transmit such payment instructions.  The 
adoption of the ISO 20022 shall support the following strategic goals of the BSP: (1) To 
allow rich and well-defined structures for important and more detailed data that will 
facilitate and promote the safe and efficient use of electronic payment systems; (2) To 
allow messaging to be expanded or changed in the future, enabling systems to support 
current as well as forthcoming technological developments; (3) To provide for the 
same messaging standards used for domestic and cross-border financial transactions, 
thereby facilitating interconnectivity, interoperability and financial integration; and 
Page 31 of 38 
(4) To adhere to the BSP regulations, including, among others, the NRPS Framework, 
that require the BSP-supervised financial institutions and retail payment systems to 
demonstrate sound risk management, and effective and efficient interoperability. 
 
Cybersecurity Policies and Measures. Financial technologies have revolutionized the 
way customers transact their financial needs in a manner that offers interoperability, 
ease and availability. Alongside these developments, the threats posed by notorious 
cyber actors have magnified as well. The increased interconnectivity and accessibility 
of systems, customers, and institutions inevitably lure more malicious actors as 
potential attack surfaces continue to widen.  
 
In 2017, the BSP issued Circular No. 982 to address rapidly evolving cyber threats. The 
Circular espouses a holistic, risk-based and cyclical approach to managing 
cybersecurity risks. It highlights the role of the board and senior management in 
spearheading sound information security governance and strong security culture 
within their respective networks. Also, with the issuance of Circular No. 1019, the BSP 
tightened the reporting regime of supervised institutions with respect to cyber-related 
incidents and operational disruptions. From ten calendar days to within two hours 
from discovery of the incident, faster reporting timelines aim to further enhance the 
industry's situational awareness and cyber resilience.  
 
The BSP continues to be vigilant of how financial institutions and markets respond to 
the volume and pace of digital transformation.  This allows the BSP to formulate 
appropriate policies to promptly manage the potentially heightened cybersecurity 
risks along with the greater use of digital payments and financial services. To further 
strengthen the cybersecurity capabilities of BSFIs, the BSP will be issuing amendments 
to the electronic banking guidelines to update the baseline security controls for 
electronic payment and financial services (EPFS) .  
 
Complementary to these policy initiatives, the BSP is developing supervisory tools 
such as the Cybersecurity Maturity Model (CMM) Framework and the Cybersecurity 
Controls Self-Assessment (CCSA) template, which are aimed at assessing 
cybersecurity maturity and posture, on both individual BSFI and industry-wide bases, 
as well as addressing gaps in regulatory compliance. These tools will better calibrate 
the BSP's supervisory responses and guide future policy direction on cyber-resilience. 
Moreover, the planned acquisition of the Advanced SupTech Engine for Risk-Based 
Compliance (ASTERisC), a Governance, Risk Management, and Compliance (GRC) 
system, will facilitate monitoring of cybersecurity compliance of BSFIs. In particular, 
the system will enable cyber profiling, reporting and self-assessments. 
 
Meanwhile, the BSP is developing the work program in preparation for the conduct of 
thematic examinations on SWIFT, mobile and internet banking, and fraud 
management systems of BSFIs.  
 
 
Page 32 of 38 
V. Enabling Policy and Regulatory Environment  
 
The BSP is committed to provide an enabling regulatory environment that fosters digital 
innovation and transformation while ensuring that attendant risks are effectively 
managed. In line with this, the BSP espouses the “test-and-learn” or “regulatory sandbox” 
approach, which provides a testing ground for new business models and technologies. 
This approach also encourages multi-stakeholder dialogue and collaboration among the 
various players across the financial sector to harmonize policies and prevent regulatory 
arbitrage. Imperative to this approach is close monitoring of BSP-supervised institutions 
to better understand the risks involved and to deploy mitigating actions in a timely 
manner, when warranted.  
 
a. Registration & Licensing 
 
The registration and licensing framework of the BSP aims to promote a level playing 
field and provide equal opportunities for all participants in the digital ecosystem, 
regardless of their size and services offered. Such regulatory stance welcomes new 
and emerging business models and services, and ensures that new sources of risk are 
identified and managed. In this regard, the BSP develops, reviews and streamlines its 
registration and licensing procedures, capital requirements, and other regulations 
affecting the entry and exit of financial service providers to ensure contestability and 
competition in the financial sector. 
 
As part of the BSP’s reform agenda of supporting digital innovations and increasing 
access to secure and efficient channels for banking, payment, remittance and other 
financial services, Circular No. 1033 was issued in February 2019 to streamline the 
electronic payments licensing process of supervised institutions. The BSP also 
simplified the registration requirements for money service businesses and pawnshop 
operators with the issuance of Circular No. 1039 in May 2019. 
 
To further promote expansion of the digital finance ecosystem in support of finance 
inclusion, the BSP is undertaking the following policy initiatives: 
 
Establishment of Digital Banks. The BSP is developing a regulatory framework on the 
establishment of digital banks in the country. This policy initiative aims to provide a 
cost-effective and convenient banking experience especially to retail clients and 
MSMEs. The BSP envisions that the issuance of such regulation will support its thrust 
of developing an inclusive, safe and stable financial ecosystem. 
 
Banks applying for a digital banking license are expected, among others, to have 
robust, secure and resilient technology infrastructure, effective data management 
strategy and practices, and sound digital governance. The BSP’s corporate governance 
and risk management standards for banks will apply to digital banks following the 
principle of proportionality. 
 
Registration of Virtual Asset (VA) Service Providers. VA systems have the potential to 
revolutionize the delivery of financial services by providing faster and more 
economical means for transferring funds, both domestic and international, thereby 
Page 33 of 38 
supporting financial inclusion.  These benefits, however, should be considered 
alongside the attendant risks in view of the higher degree of anonymity involved, 
velocity of transactions, volatility of prices and global accessibility. The BSP will be 
providing guidance to prevent the misuse of VAs for money laundering and terrorist 
financing, and to mitigate information technology (IT) and consumer protection-
related risks, among others. 
 
PhilSys-linked Account Opening or e-KYC. The BSP is set to develop guidance on the 
use of digital identification and verification as part of the customer onboarding 
process for supervised financial institutions. This initiative aims to facilitate seamless 
and remote online identity verification by leveraging on the PhilSys rollout. The use of 
e-KYC will support the acceleration of digital financial inclusion by making ownership 
of a transaction account easier and more accessible. 
 
Open Architecture Project. This initiative aims to expand the range of institutions that 
can serve as touch points for financial products and services offered by different 
providers. The issuance on a regulatory framework on open architecture is expected 
to support the propagation of digital financial products and services, and help bolster 
the increased use of digital payments by a wider set of customers. 
 
b. Oversight Framework 
 
The adoption of the Payment System Oversight Framework (PSOF) with the issuance 
of Circular No. 1089 forms part of the second leg of the phased-in implementation of 
Republic Act (R.A.) No. 11127 or the National Payment Systems Act (NPSA). It may be 
recalled that under Circular No. 1049, operators of payment systems (OPS) that are 
operating at the time of the effectivity of R.A. No. 11127 are required to register with 
the BSP. All succeeding regulatory issuances to further implement the NPSA will be 
anchored on the PSOF.  
 
The Oversight Framework sets out the policy objectives, the scope of the oversight 
function and the oversight activities to exercise the said function, as well as the 
cooperative oversight arrangements that may prospectively be entered into with 
other regulators (domestic and foreign). The Oversight Framework likewise focuses 
on the designation of a payment system which provides the description of the criteria 
and process to be followed for designation, and the general oversight expectations as 
a consequence of the designation of a payment system. The Oversight Framework 
recognizes that the safety, efficiency, and reliability of a designated payment system 
may be at risk as a result of weaknesses in governance by the operator of a designated 
payment system.  To prevent disruption in such a payment system and the country’s 
payments ecosystem in general, the Oversight Framework provides for the 
appointment by the BSP of a manager to administer the operation of the designated 
payment system operator.  
 
The adoption of the Payment System Oversight Framework forms part of the BSP’s 
reform agenda of strengthening governance over payment systems, especially in 
these times when the smooth functioning of these systems has been challenged by 
the COVID-19 pandemic. 
Page 34 of 38 
 
The BSP is also closely working with the PPMI to ensure that its members which are 
offering digital payment services through PESONet and InstaPay employ a responsive 
consumer redress framework. This framework entails a standardized complaint 
handling among ACH participants where baseline requirements, guidelines and 
expectations on fraud handling and resolution are clearly laid out and documented. 
This ensures that the roles and responsibilities of all parties involved are well defined 
and standard performance measures are properly established. To promote 
transparency, such redress mechanism shall be made publicly available. This is among 
the priority initiatives of the PPMI considering the relevance of consumer protection 
in preserving the public’s trust and confidence in digital payment services. 
 
Meanwhile, the BSP is developing the Digital Regulatory Framework for Non-Bank 
Financial Institutions (NBFIs)  which aims to rationalize and streamline the varying 
rules and regulations applicable to NBFIs. With this initiative, the BSP will be 
implementing a single, unified framework for non-bank players. This shall level the 
playing field for market participants and foster an enabling environment for digital 
payment services by diverse providers. Such framework will set out the minimum 
regulatory standards that all NBFIs will be required to meet in order to participate and 
offer digital payment services in the Philippine market.  
 
c. Consumer Protection & Digital Literacy  
 
The BSP, in collaboration with industry associations and selected stakeholders, will 
implement a program to enhance cybersecurity awareness and digital literacy in the 
Philippines. Such a program supports the BSP’s policy priority of expanding the digital 
finance ecosystem by encouraging massive usage by consumers across all sectors. The 
underlying objective of the program is to increase trust and confidence in the security 
of digital payments and other technology-enabled financial transactions, especially in 
light of increasing options made available by varied financial institutions. 
 
This initiative will further promote and support the growth of digital financial services 
by raising the public's digital finance literacy and cybersecurity awareness. This will 
ensure the public's trust and confidence in the availment of digital financial services, 
allowing it to flourish and lead to greater financial inclusion. 
 
The BSP has also launched its Consumer Assistance Managements System (CAMS) 
with Chatbot functionality, which is now named BSP Online Buddy (BOB). Equipped 
with artificial intelligence and Native Language Processing (NLP), the said platform 
mainly provides the BSP with an automated supervisory capability for complaints 
against its supervised financial institutions. 
 
This initiative supports the BSP's own digitization initiative by allowing an easier and 
faster way to gather complaints from the public. The Chatbot also allows for 
automated complaints resolution, which translates to improved efficiency. Ultimately, 
this initiative will help increase public trust and confidence in the BSP as a financial 
regulator. This will hopefully serve as encouragement for the public to get onboard 
the formal financial system and further financial inclusion. 
Page 35 of 38 
 
d. In-depth Research on Digital Payment Tools & Trends 
 
In addition to the risk of the bankruptcy of the electronic money issuer (EMI), e-money 
accounts also face the risk of bankruptcy of the deposit-taking institution holding the 
trust account with the e-money float. In this regard, the BSP is undertaking a study on 
e-money fund protection scheme. 
 
The study aims to determine the appropriate risk management mechanisms that can 
be implemented to protect end-user funds held by EMIs in the same way that bank 
deposit accounts are secured by deposit insurance schemes. This initiative on end-
user fund protection aims to promote public trust in and uptake of e-money accounts 
toward greater financial inclusion and digitalization of payments. 
 
VI. Inter-agency/Stakeholder Collaboration  
 
The exponential growth of e-payments in the country can be best achieved through multi-
stakeholder collaboration, a concept employed by the BSP in developing policies and 
enforcing regulations. This whole-of-society approach entails the engagement of key 
stakeholders facilitating holistic actions to achieve the shared vision of an efficient, 
inclusive, safe and secure digital payments ecosystem. Guided by this approach, the BSP 
has forged various strategic institutional partnerships with both government agencies and 
the private sector to ensure alignment, coordination and optimization of efforts. Among 
these key collaborative platforms are: 
 
• Financial Inclusion Steering Committee (FISC). The FISC is an inter-agency 
coordinating body that serves as a platform for public-private coordination and 
cooperation. The FISC likewise pursues the harmonization of policies and programs 
that drive the implementation of the National Strategy for Financial Inclusion (NSFI) 
and help attain an inclusive digital finance ecosystem. Under the FISC, collaboration is 
underway on efforts to fast-track the National ID System,  as well as the payment of 
wages and transport fares and the distribution of cash transfers under the 4Ps and the 
recent Bayanihan Act SAP through the use of transaction accounts and by digital 
means. These initiatives will help build compelling use cases for shifting to digital 
payments. 
 
• Cooperation with the DTI to craft the Philippine E-Commerce Roadmap 2022. The 
BSP is among 28 government agencies and more than 80 private sector entities 
involved in crafting the country’s E-Commerce Roadmap 2022. Currently in its 
consultation and formulation stage, the said initiative aims to undertake a baseline 
study of the current digitalization state of Philippine MSMEs and come up with 
measurable targets, strategies, metrics, and policy initiatives. 
 
In particular, the BSP is providing assistance in designing and facilitating capacity 
building for MSMEs pivoting to online selling, specifically regarding the use of digital 
payments. This supports the strategic objective of raising the share of digital 
payments, particularly along the P2B and B2B streams.  
 
Page 36 of 38 
• Financial Sector Forum Financial Technology Committee (FinTech Committee). The 
Committee was created in August 2018 in response to the rapid expansion of fintech 
and the related issues cutting across financial sector jurisdictions. The Committee is 
tasked to, among others, ensure that fintech innovation fulfills the regulatory goals of 
maintaining financial stability; upholding consumer protection, cyber security and 
data privacy; and preventing money laundering and other illicit activities. A 
Cooperative Oversight Framework is currently being developed to institutionalize 
collaboration among the regulatory agencies.  
 
Under the FinTech Committee, the Financial Sector Forum (FSF)16 aims to establish a 
cohesive and consistent approach to fintech innovation in the areas of regulation, 
supervision, and policy making. With this objective, the Committee undertook the first 
step of identifying the various fintech use cases and the scope of authorities of each 
regulator.  As part of its next steps to harmonize regulatory responses to fintech 
innovations across the sector, the Committee is working on the adoption of common 
standards on information security governance. This initiative will address the 
regulatory gaps identified by the Committee, including, among others, on 
enforcement actions.  
 
The Committee is also engaging fintech players to build capacity of the regulatory 
authorities for enhanced supervision and oversight readiness. The Committee 
continuously monitors developments in the fintech landscape and seeks ways to 
enhance its surveillance capabilities to strengthen its situational awareness of new 
technological trends and potential regulatory concerns.  
 
• Task Force on the Adoption of ISO 20022 on Philippine Payments (TF-ISO 20022).  In 
2018, the BSP established the TF-ISO 20022 as the driving force of the BSP and of the 
Philippine financial industry in ensuring the adoption of the ISO 20022 standard, in 
synch with the upgrading of the PhilPaSS.  The TF is comprised of representatives both 
from the BSP and participants of PhilPaSS.  In 2020, the TF successfully established the 
ISO 20022 Rulebook for the Philippine Financial Industry and onboarded stakeholders 
through various briefings. The TF shall continue to ensure the implementation of the 
standard, guided by the published Rulebook and compliant with BSP’s Roadmap and 
timelines on the target implementation of the PhilPaSSplus in 2021.   
 
VII. Digitally-Transformed BSP  
 
The different initiatives being undertaken by the BSP to support digital payment 
transformation are underpinned by the BSP’s own digital transformation.  
 
Digital transformation is an evolutionary process that synergizes people, processes, and 
technology to create value. The enablement of digital transformation in the BSP is 
anchored on the establishment of a digital native enterprise, wherein processes, 
transactions and interactions are largely technology-enabled.  The transformation will be 
seen in five dimensions, involving an organizational culture guided by a robust IT 
                                                             
16 The FSF is composed of the BSP, Insurance Commission, Philippine Deposit Insurance Corporation and the 
Securities and Exchange Commission. 
Page 37 of 38 
governance mechanism, integrated systems to provide the customer with an efficient IT 
ecosystem, intelligence in terms of cognitive and artificial intelligence capabilities, 
improvement in operations to optimize work processes to support decision-making, and 
a shift in work mindset to drive the adoption of digital competencies. Successful 
transformation can only happen if the adoption of new technology is accompanied by a 
true digital strategy that will create an organization and cultural setting that encourages 
innovation and supports change. 
 
This digital transformation is well underway and continuing at a fast pace.  The impact of 
the COVID-19 pandemic has accelerated the implementation of the strategic and IT 
modernization initiatives under the BSP Information Systems Strategic Plan (ISSP) 2020-
2023, which demonstrated the BSP’s agility to adapt to a Volatile, Uncertain, Complex, 
and Ambiguous environment. With the establishment of this Roadmap and the New 
Economy Arrangements, additional focus will be turned to ICT projects that will 
strengthen the BSP’s cyber resilience, support digital innovation, increase cloudification 
and mobility, and enhance the Bank’s IT infrastructure. 
 
In addition to the PhilSys, PhilPaSSplus and CAMS initiatives described earlier, there are 
several other ICT projects that are part of the ISSP and directly support digital payment 
transformation. 
 
First is the implementation of the New Order of Payments System (NOPS). This 
application will make payments through internet/mobile banking, and mobile money 
services available to BSP employees and external clients with no Demand Deposit 
Accounts maintained in the BSP. The implementation of the NOPS will not only make 
collections safer, easier, and more reliable, but will also represent a key development in 
digital finance infrastructure. It shall also lead to an increase in the P2G and B2G digital 
payment streams.  
 
Another is the rollout of an updated Currency Operations Management System for 
regional operations. This system covers currency forecasting, distribution, inventory, and 
retirement, and will provide regional users with securities management capabilities. This 
system will be valuable in enhancing the efficiency of the currency production and 
projection processes. 
 
The BSP is likewise gearing up for the full implementation of the Data Governance Policy 
through the issuance of a Data Governance Manual. In December 2019, the BSP Data 
Governance Policy was issued. The policy aims to ensure data quality and integrity; to 
drive efficiency and effectiveness in data management processes and the generation of 
required information; and to strike a reasonable balance between data accessibility and 
the protection of data privacy and confidentiality. It covers all data collected and used by 
the BSP in any form. Following the creation of an internal Data Governance Council, work 
is being undertaken on the codification of internal standards in a Data Governance 
Manual. The full implementation of the policy is expected to, among others, increase 
stakeholder confidence in the handling of data and serve as a model for the standards to 
be adopted by supervised entities. 
 
Page 38 of 38 
Finally, the BSP aims to implement a Financial Institution and Stakeholder Relationship 
Management System, which will cater to all BSFIs. The system will include reporting and 
other related services, in line with each entity’s corresponding licenses and authorities. 
The increasing digitalization of transactions using this system may also serve to further 
support the transformation toward digital payments. 
 
 
VIII. The Role of Strategic Communication  
 
The BSP recognizes the critical role of strategic communication in promoting awareness 
of digital payments and the platforms available, as well as in improving digital financial 
literacy and consumer protection in support of digital financial inclusion.  
 
In this regard, the BSP is developing an integrated communication plan to support the 
attainment of the Roadmap’s strategic outcomes. The said communication framework will 
clearly outline the digital payment transformation rationale and goals, delineate the roles 
and responsibilities, and ensure that implementation processes of the Roadmap initiatives 
are well disseminated to target stakeholders. Moreover, such plan will be carried out in a 
cost-efficient manner while ensuring the consistency of messaging across all channels.  
 
In the 2019 BTCA report , key stakeholders in the digital payments ecosystem are grouped 
into three main categories - the Government, Businesses and Persons. The roles of these 
stakeholders constantly shift, depending on whether they are situated as the Payee or the 
Payor in the digital payment stream. Thus, in tailoring the integrated communication plan, 
consideration will be given to the nature of the payment streams and the role/s that each 
stakeholder plays.  
 
To maximize the impact and recall value to the public of the BSP’s push to go digital, there 
will be standardization of information collaterals and promotional items. The BSP is also 
looking into expanding its mainstream and social media presence as a communication 
channel, especially in the region and provinces.  
 
The Public Perception Survey (PPS) will also be expanded to solicit feedback through a 
wide array of modalities, including digital means, in light of the COVID-19 pandemic. The 
initiative intends to solicit and gauge the public's trust and confidence level both in the 
BSP and in its digital payment initiatives. The initiative aims to gather valuable feedback 
and expand the platforms and frequency through which public sentiment may be 
captured. 
 
Finally, the BSP, in partnership with the PPMI, will be launching a stakeholder recognition 
and awards program as part of the BSP stakeholder engagement efforts. This program 
will be in recognition and appreciation of digital payment players in the country 
(consumers, merchants, PSPs, etc.) for exhibiting exemplary performance and introducing 
value-adding innovations. 
Annex A 
Page 1 of 6 
 
Digital Payments Transformation Roadmap 
Schedule of Strategic Initiatives 
 
Strategic Initiative 
Priority Actions
2020-2021
2022
2023
A. Digital Payment Streams
QR Ph P2M pilot 
implementation (P2B, 
P2P) 
• 
Standard 
Specification 
• 
Determine pricing 
mechanism 
• 
On-boarding of 
InstaPay 
participants 
• 
Presentation of 
Concept Note to 
select LGUs and 
FSPs 
• 
Formalize 
agreement with 
participating LGUs 
• 
Pilot roll-out 
Zero fees on micro 
transactions (P2B, 
P2P) 
• 
Consultation with 
industry 
Direct Debit (P2B, B2B)
• 
Pilot of direct debit 
Bills Pay (P2B, B2B)
• 
Pilot of bills pay via 
real time ACH 
PESONet Multiple 
batch settlement 
(MBS) (P2P, P2B, B2B, 
G2P) 
• 
Amend ACH rules 
• 
Draft PhilPaSS 
Operating 
Guidelines 
• 
Amend policy on 
settlement 
guarantee 
mechanism 
• 
Testing by CSO and 
ACH participants 
Support to DSWD on 
4Ps cash transfers thru 
transaction accounts 
(G2P) 
• 
Inclusion of BSP 
definition of 
transaction accounts 
in IRR of RA 11310 
• 
Revision of DSWD 
guidelines and MOA 
with financial 
service providers 
(FSPs) 
Annex A 
Page 2 of 6 
 
Strategic Initiative 
Priority Actions
2020-2021
2022
2023
• 
Land Bank 4Ps cash 
card converted to 
transaction accounts
• 
Financial literacy 
Promote use of digital 
payment channels for 
implementation of 
COVID support 
measures, specifically 
for MSMEs and 
informal sector (G2P) 
• 
Issuance of 
Executive Order or 
other policy to 
support use of 
transaction account 
and partnership 
with non-GFI FSPs 
• 
Agreement between 
BSP and 
implementing 
agencies 
DOLE partnership on 
payment of wages 
thru transaction 
accounts (B2P) 
• 
Financial inclusion 
forums for target 
industries and 
worker groups 
conducted 
• 
DOLE advisory to 
employers 
• 
Monitoring of 
adoption through 
employer survey 
• 
Financial inclusion 
forums for target 
industries and 
worker groups 
conducted 
BTCA diagnostic
• 
Public launch of the 
results of the 2020 
BTCA Country 
Diagnostic 
Conduct of Nationwide 
and BSP Bankwide 
Consumer Payments 
Survey 
Subject to health and 
government restrictions:
• 
Pre-survey 
preparation 
• 
Reporting of results 
Study on the issuance 
of central bank digital 
currency 
• 
Completion of study 
Support to DTI on e-
commerce program 
for MSMEs thru 
capacity building 
initiatives (P2B, B2B) 
• 
Report on the actor-
specific actions to 
drive 
merchant/MSME 
acceptance of digital 
payments 
 
 
Annex A 
Page 3 of 6 
 
Strategic Initiative 
Priority Actions
2020-2021
2022
2023
B. Digital Finance Infrastructure
B.1 Key Payments Infrastructure
Philippine 
Identification System 
(PhilSys) 
• 
Development of 
strategy and 
roadmap for PhilSys 
use case in the 
financial services 
sector  
• 
Development of 
monitoring tool on 
adoption of PhilSys 
in the financial 
services sector 
• 
Live implementation
 
PhilSys ID Project
• 
Production of blank 
cards 
• 
Testing of card 
personalization by 
Philippine Statistics 
Authority (PSA) 
• 
Full implementation 
of personalized 
PhilSys IDs 
• 
MOA between PSA and BSP is up to 5 years. 
PhilPaSSplus Project
• 
Live implementation 
Open Banking
• 
Implementation 
B.2 Supporting Credit Platforms
Credit Risk Database 
(CRD) 
• 
Creation and hiring 
of CRD Project 
Implementation 
Unit (PIU) 
• 
CRD model 
development 
• 
Turnover of CRD 
operations to 
permanent organic 
unit 
• 
Completion of 
model validation 
Moveable Collateral 
Registry 
• 
Issuance of supporting policies and guidelines to promote adoption of 
movable collateral by banks (with inputs from digital SCF study) 
Study on Digital Supply 
Chain Financing 
• 
Technical assistance 
from development 
partners 
• 
Release of results of 
the study with 
Annex A 
Page 4 of 6 
 
Strategic Initiative 
Priority Actions
2020-2021
2022
2023
recommended 
approach 
Agent Registry
• 
Development of IT 
solution 
• 
Issuance of 
implementing 
policy and 
harmonization of 
agent reporting 
framework  
B.3 Information and Communication Technology (ICT) Policy Reforms17
Open Access in Data 
Transmission Act 
• 
The bill is currently 
filed with Congress 
and referred to the 
Committee on 
Information and 
Communications 
Technology in July 
2019 
Amendment to 
Executive Order (EO) 
No. 467 
• 
The Financial 
Inclusion Steering 
Committee is 
working with the 
National 
Telecommunications 
Commission (NTC) 
to ensure that the 
proposed 
amendments are in 
accordance with 
existing laws, rules 
and regulations, as 
well as NTC’s policy 
priorities and views. 
C. Digital Governance and Standards
Open Banking and API 
Standards 
• 
Formulation and 
issuance of policy 
Data Governance and 
Ethical Use of Data 
Policy for Banks 
• 
Exposure of 
discussion paper 
Adoption of ISO 20222 
international 
messaging and 
• 
Full implementation 
                                                             
17 The BSP provides support to these ongoing ICT policy reforms. 
Annex A 
Page 5 of 6 
 
Strategic Initiative 
Priority Actions
2020-2021
2022
2023
communication 
standard 
Updating of baseline 
security controls for 
electronic payment 
and financial services 
• 
Formulation and 
issuance of policy 
Development of 
Cybersecurity Maturity 
Model Framework 
• 
Formulation and 
issuance of policy 
Conduct of 
Cybersecurity Controls 
Self-Assessment 
• 
Updating of CCSA 
Template based on 
CCSA Responses 
Advanced SupTech 
Engine for Risk-Based 
Compliance 
• 
Live implementation 
Conduct of Thematic 
Examinations 
 
• 
Implementation 
D. Enabling Policy and Regulatory Environment
D.1 Registration and 
Licensing 
 
Guidelines on 
Establishment of 
Digital Banks 
 
 
• 
Formulation and 
issuance of policy  
Guidelines on 
Registration of Virtual 
Asset Service Providers
• 
Formulation and 
issuance of policy 
Guidelines on PhilSys-
linked Account 
Opening or eKYC 
• 
Issuance of 
guidelines on 
PhilSys-enabled 
eKYC 
 
Note: Dependent on the 
timeline of PhilSys ID roll-
out
Open Architecture 
Project 
• 
Formulation and 
issuance of policy 
 
D.2 Oversight 
Framework 
 
Payment System 
Oversight Framework 
 
 
• 
Formulation and 
issuance of policy 
framework 
 
Annex A 
Page 6 of 6 
 
Strategic Initiative 
Priority Actions
2020-2021
2022
2023
Digital Regulatory 
Framework for NBFIs 
• 
Development of 
conceptual 
framework  
• 
Development and 
issuance of 
implementing 
regulations 
 
D.3 Consumer 
Protection & Literacy 
 
Cybersecurity 
Awareness and Digital 
Literacy Program 
• 
Full program roll-out 
Consumer Assistance
Managements System 
(CAMS) with Chatbot 
functionality 
• 
Live implementation 
D.4 In-depth Research 
on Digital Payment 
Tools & Trends 
Study on E-money 
Fund Protection 
Scheme 
• 
Release of results of 
the study with 
recommendations 
E. Digitally-Transformed BSP
New Order of 
Payments System 
• 
Live implementation 
Currency Operations 
Management System 
for regional operations 
• 
Live implementation 
• 
Post-
Implementation 
Implementation of 
Data Governance 
Policy 
• 
Issuance of Data 
Governance Manual 
Financial Institution 
and Stakeholder 
Relationship 
Management System 
• 
Live 
implementation 
F. Strategic Communication
Communication
Initiatives  
• 
Development of Integrated Communication Plan 
• 
Standardization of information collaterals and promotional items 
• 
Expansion of the BSP’s mainstream and social media presence 
• 
Expansion of the Public Perception Survey modalities 
• 
Stakeholder recognition and awards program