Electronic Payment and Financial Services Overview

Electronic Payment and Financial Services (EPFS)

• Bangko Sentral recognizes EPFS's role in economic growth, facilitating fund transfers for productive activities.
• EPFS aims for a secure, efficient, reliable, affordable, and inclusive national payment system.
• EPFS products/services include allowing customers to receive/initiate transactions, access transaction account information electronically, and move funds between accounts or use related products/services (e.g., online/mobile loans).
• Electronic fund transfers (EFT) are synonymous with electronic payment and involve transfers between accounts (in the same or different banks).
• Excludes domestic remittances under existing Bangko Sentral regulations.
• Transaction Accounts are accounts, like deposit, e-money, or e-wallets, maintained with a bank or non-bank financial institution (BSFI).

Classification of EPFS

• Basic EPFS: Limited to services allowing fund receipt or account information access (e.g., account balance, statement).
• Advance EPFS: Enables fund transfers and other financial transactions beyond basic services.

E-Money

• Electronically stored monetary value held in non-interest-bearing accounts.
• Denominated in Philippine Peso or other currencies.
• Pre-funded by customers for payment transactions.
• Accepted as a payment method by issuers and other entities.
• Represented by a claim on the issuer.
• Withdrawable in cash or cash equivalent, transferable to other accounts/instruments.

Electronic Instruments/Devices

• Include cash cards, prepaid cards, stored-value cards, or digital wallets via mobile phones for electronic payments and financial services.

E-Money Instrument Classifications

• EMI-Banks
• EMI-Non-Bank Financial Institutions (includes cooperatives)
• Non-bank institutions registered as monetary transfer agents (EMI-Others).

Minimum Systems and Controls

• Sound management practices, administrative/accounting procedures, and adequate internal controls.
• Well-designed computer systems thoroughly tested before launch.
• Security policies to protect data integrity, authenticity, and confidentiality.
• Fraud risk management systems appropriate for the specific type of activity.
• ADEQUATE business continuity and disaster recovery plan.
• Effective audit functions to check the security control environment and critical systems.

E-money Purchase and Issuance

• E-money cannot be purchased at a discount.
• E-money denominated in foreign currencies is subject to existing foreign exchange rules.
• It is not a deposit and does not earn interest or similar incentives.
• Promotional incentives are allowed, but those incentives cannot be based on the outstanding balance.

Consumer Protection

• Adherence to Bangko Sentral guidelines on consumer protection.
• Core principles include:
  • Disclosure and transparency of E-money transactions.
  • Protection of client information.
  • Fair treatment of E-money customers.
  • Effective recourse for handling complaints.
  • Protection of E-money consumer assets from fraud.

Minimum Disclosure Requirements

• Clear terms and conditions of E-money use, available through various channels (website, brochures, forms).
• Acknowledgement from users and merchants that they understand the terms and conditions.
• Information about terms should include: Issuer; Transaction types; Fees/Charges; FX rates/risks; User transaction history access; and Procedures to report lost/stolen E-money and lodging complaints.

Interoperability and Aggregate Limits

• BSFIs need to participate in an Automated Clearing House (ACH) for interoperable E-money products (to support fund transfer functionality).
• BSFIs have to utilize a client categorization process for pre-defined limits/thresholds (for risk assessment and customer due diligence purposes).
• A total of all E-money instruments can determine compliance with regulatory limits.

Liquidity Requirement

• Banks must have sufficient liquid assets to cover E-money redemptions.
• Levels of liquidity needed are tied to the amount of outstanding E-money denominated in specified currencies.

This quiz explores the role of Electronic Payment and Financial Services (EPFS) in economic growth and the features that enhance the national payment system. It delves into electronic fund transfers, transaction accounts, and essential services provided under EPFS. Answer questions to test your understanding of EPFS's functionalities and classification.