Electronic Payment and Financial Services Overview

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Questions and Answers

What is the primary responsibility of BSFIs regarding e-money redemptions?

To ensure transparent fees on all transactions

To provide customer service contact details

To maintain adequate liquid assets to meet e-money redemptions (correct)

To promote incentives for increased e-wallet usage

How should BSFIs categorize clients for e-money instruments?

Based solely on transaction history

Based on the total balance in their accounts

Through a client categorization process based on risk assessments (correct)

Using a random selection process

What does the interoperability of e-money systems aim to achieve?

Create exclusive platforms for different BSFIs

Allow fund transfer functionality across different platforms (correct)

Limit transactions to specific e-money instruments

Increase individual transaction fees

What should be included in e-wallet disclosure requirements to protect consumers?

Customer service contact numbers and consumer assistance mechanisms Signup and view all the answers

What is a key factor that BSFIs must consider when determining the limits for e-money transactions?

The thresholds applied by the payment systems they participate in Signup and view all the answers

What is a primary requirement for BSFIs regarding E-money customer protection?

To establish effective recourse for handling complaints and redress mechanisms. Signup and view all the answers

Which of the following should NOT be included in the terms and conditions provided by BSFIs?

User's personal financial situation. Signup and view all the answers

In what way can BSFIs incentivize the usage of E-wallets?

Through promotional incentives not based on outstanding balance. Signup and view all the answers

What is NOT a core principle BSFIs must adhere to for consumer protection?

Freedom from any regulatory compliance. Signup and view all the answers

Which channel is NOT specified as a method for providing terms and conditions to users?

Email notifications. Signup and view all the answers

How must BSFIs handle lost or stolen E-money according to the requirements?

By establishing procedures for reporting and addressing such incidents. Signup and view all the answers

What aspect must BSFIs disclose concerning multi-currency E-money wallets?

Applicable exchange rates and FX risks. Signup and view all the answers

What is one of the minimum disclosure requirements for E-money services?

Terms and conditions clearly stated. Signup and view all the answers

Which of the following best describes E-money according to the regulations?

E-money can only be issued and redeemed at face value. Signup and view all the answers

What classification of Electronic Money Institutions (EMIs) includes cooperatives?

EMI-Non-Bank Financial Institutions (EMI-NBFI) Signup and view all the answers

Which option is NOT a requirement for ensuring proper E-money issuance and operations?

Issuance and redemption of E-money at non-constant values. Signup and view all the answers

What is a core component of consumer protection in E-money operations?

Robust security policies to safeguard data integrity. Signup and view all the answers

Which of the following guidelines is necessary for effective fraud risk management in E-money?

A risk management system that is proportionate to the EMI's classification. Signup and view all the answers

What is a requirement regarding foreign currency E-money issuance?

It must comply with existing foreign exchange rules. Signup and view all the answers

What aspect of electronic payment systems enhances interoperability?

Standardization of technical protocols and processes. Signup and view all the answers

What regulatory requirement must banks satisfy to offer E-money services?

Obtain an Electronic Payment and Financial Services (EPFS) license. Signup and view all the answers

What characteristic of digital wallets makes them significant in E-money?

They enable access to E-money through electronic devices. Signup and view all the answers

Study Notes

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.

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Description

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.