Electronic Payment & Financial Services Overview

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Questions and Answers

What does BSFIs need to have in order to meet E-money redemptions at all times?

  • Electronic payment authorization
  • A minimum transaction fee
  • Sufficient liquid assets (correct)
  • Prior customer consent

Which framework governs the interoperability of E-money products and services?

  • Electronic Banking Regulation Framework
  • Automated Teller Machine Framework
  • National Retail Payment System Framework (correct)
  • Consumer Financial Protection Framework

What process must BSFIs adopt to implement limits on E-money transactions?

  • Standardized transaction rates
  • Publicly available transaction limits
  • Risk assessment and customer due diligence (correct)
  • Random selection of customers

What must be done when a BSFI issues multiple E-money instruments to a single E-money holder?

<p>All transactions should be aggregated to comply with established limits (D)</p> Signup and view all the answers

Which of the following is NOT a component of liability related to e-wallet instruments or value?

<p>Customer service inadequacy (D)</p> Signup and view all the answers

What is a key characteristic of E-money based on its issuance?

<p>It is only issued at face value. (A)</p> Signup and view all the answers

Which of the following entities is classified as EMI-NBFI?

<p>Cooperatives (C)</p> Signup and view all the answers

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

<p>They must ensure transparency and fair treatment of E-money customers. (C)</p> Signup and view all the answers

What is NOT a requirement for the operations of Electronic Money Institutions?

<p>A minimum balance requirement for accounts (B)</p> Signup and view all the answers

What type of information must BSFIs disclose in their E-money terms and conditions?

<p>The issuer responsible for E-money and fees associated with transactions. (C)</p> Signup and view all the answers

What must banks do before offering E-money services?

<p>Obtain approval from the Bangko Sentral (C)</p> Signup and view all the answers

How should the terms and conditions of E-money services be made available to users?

<p>Through various channels such as websites, brochures, and registration forms. (D)</p> Signup and view all the answers

Which electronic instruments are classified under E-money?

<p>Stored value cards (C)</p> Signup and view all the answers

What must BSFIs obtain from users and merchants regarding E-money terms?

<p>Acknowledgement that they have read and understood the terms and conditions. (B)</p> Signup and view all the answers

What should be included in the proper security policies for E-money operations?

<p>Confidentiality protections for e-commerce transactions (B)</p> Signup and view all the answers

What recourse should BSFIs have for handling consumer complaints?

<p>Effective mechanisms for redress and complaint handling. (C)</p> Signup and view all the answers

What must be done when accrediting E-money agents?

<p>A comprehensive background check should be performed. (C)</p> Signup and view all the answers

What is an important aspect of E-money consumer asset protection?

<p>Protection against fraud and misuse. (D)</p> Signup and view all the answers

Which of the following is true about E-money's issuance and foreign currency?

<p>It must comply with existing foreign currency regulations. (A)</p> Signup and view all the answers

What information about transaction history must BSFIs provide users?

<p>Availability of users' transaction history and statements. (C)</p> Signup and view all the answers

What should the refund policy outlined by BSFIs include?

<p>Conditions and procedures for refunds. (A)</p> Signup and view all the answers

What is the primary aim of Electronic Payment and Financial Services (EPFS)?

<p>To establish a safe and inclusive national payment system (A)</p> Signup and view all the answers

Which of the following is NOT a characteristic of Electronic Fund Transfer (EFT)?

<p>Can occur only within the same BSFI (C)</p> Signup and view all the answers

What distinguishes Advanced EPFS from Basic EPFS?

<p>Advanced EPFS includes transactions beyond basic services (D)</p> Signup and view all the answers

Which of the following statements about e-money is true?

<p>It represents a claim on its issuer (B)</p> Signup and view all the answers

Which of the following best explains what a transaction account is?

<p>An account held with a BSFI that can include various forms such as e-money (D)</p> Signup and view all the answers

Which of the following is a feature of basic Electronic Payment and Financial Services?

<p>Allows only receipt of funds or account information access (B)</p> Signup and view all the answers

What must be true about e-money issued by a provider?

<p>It must be accepted as payment by the issuer and affiliated merchants (C)</p> Signup and view all the answers

Which statement about fund transfers in EPFS is accurate?

<p>Fund transfers are facilitated through electronic channels (B)</p> Signup and view all the answers

Flashcards

Electronic Payment and Financial Services (EPFS)

Services that allow customers to make and receive payments electronically, including accessing transaction account information and transferring funds.

Electronic Fund Transfer (EFT)

Transferring money electronically between accounts, inside or outside a bank.

Transaction Account

An account (e.g., deposit, e-money) used for transactions with a financial institution.

Basic EPFS

Limited EPFS services focusing on receiving funds or checking account information.

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Advanced EPFS

EPFS services that include fund transfers and other financial transactions.

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e-money

Stored electronic value used for payments. Not interest-bearing.

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Non-interest-bearing non-deposit account

An account that doesn't pay interest and isn't a regular deposit account.

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Electronic Payment

Transferring money between two accounts, through electronic devices.

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EMI-Banks

Banks that offer electronic money services (e-money) under an EPFS license.

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EMI-NBFIs

Non-bank financial institutions offering e-money services. This includes cooperatives.

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EMI-Others

Non-bank institutions registered as monetary transfer agents that provide e-money services.

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E-money Issuance Limits

E-money is only issued and redeemed at face value. It cannot be purchased for a discount.

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E-money Foreign Currency

Issuing e-money in foreign currencies is regulated under existing foreign exchange rules.

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E-money vs. Deposit

E-money is not considered a deposit, so it doesn't earn interest.

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Sound Management for E-money

Issuers of e-money must have strong management, internal controls, secure IT systems, and fraud prevention measures.

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E-money Agent Accreditation

E-money issuers must have detailed criteria for selecting and reviewing their agents and partners.

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Interoperability of E-money

E-money products should be able to work together seamlessly, allowing funds transfer between different providers through a standardized system.

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Aggregate Limits for E-money

The total value of transactions and funds loaded across all E-money instruments held by an individual is considered when setting limits.

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Liquid Assets for E-money Issuers

E-money issuers must maintain enough liquid assets to cover redemptions and ensure customer funds are protected.

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What is the role of an Automated Clearing House (ACH) for E-money interoperability?

An ACH acts as a central hub, enabling the transfer of funds between different E-money providers in a standardized and automated manner.

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What is the purpose of client categorization for E-money limits?

Categorizing clients based on their risk profiles helps set appropriate limits and thresholds for E-money transactions.

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E-money Incentive Rule

E-money accounts cannot earn interest or similar benefits that could be considered interest earnings. However, promotional incentives not based on the account balance are allowed to encourage usage and attract new customers.

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E-money Consumer Protection

Financial institutions offering e-money services must adhere to Bangko Sentral regulations on financial consumer protection. This includes transparency, client information protection, fair treatment, complaint handling, and protection against fraud.

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E-money Disclosure Requirements

Financial institutions must provide clear terms and conditions for using e-money. This information must be available through various channels like websites, brochures, and registration forms.

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E-money Terms and Conditions

Terms and conditions must include information like the e-money issuer, transaction types, fees, FX risks (if applicable), transaction history access, complaint procedures, refund policy, and user/merchant rights.

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E-money Loss or Theft

Procedures for reporting lost or stolen e-money and handling complaints should be outlined in the terms and conditions. This includes how losses and liabilities from security breaches, system failures, or human errors are resolved.

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E-money Transaction Type

Financial institutions must clearly explain the types of transactions allowed using e-money, such as purchases, transfers, or bill payments.

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E-money Fee Structure

Financial institutions must disclose all applicable fees and charges related to using e-money, including transaction fees, account maintenance fees, and any other relevant charges.

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FX Risks and Rates

For e-money wallets supporting multiple currencies, the terms and conditions must explain FX risks and the basis used for calculating exchange rates.

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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 safe, efficient, reliable, affordable, and inclusive national payment system.
  • EPFS products/services allow customers to receive/initiate financial transactions electronically (computers, mobiles, ATMs).
  • Access to transaction account information is facilitated electronically.
  • Fund transfers between accounts are supported, along with access to credit, investment, trust, or other banking products/services (e.g., online loans).

Electronic Fund Transfer (EFT)

  • Synonymous with electronic fund transfer.
  • Refers to transferring funds between two accounts (same or different banks).
  • Initiated using electronic devices and channels; excludes domestic remittances.

Transaction Account

  • Account type (deposit, e-money, electronic wallet) maintained with a bank or non-bank financial institution (BSFI).

Classification of EPFS

  • Basic EPFS: Limited services like account balance/statements retrieval.
  • Advance EPFS: Includes fund transfers and other financial transactions.

E-Money

  • Electronically stored monetary value in a non-interest-bearing account.
  • Denominated in Philippine Peso or other foreign currencies.
  • Pre-funded by customers for transactions.
  • Accepted as payment by issuers and merchants.
  • Issued against received funds equivalent to monetary value.
  • Withdrawable in cash or a cash equivalent; transferable to other accounts/instruments.

Electronic Instruments/Devices

  • Cash cards, prepaid cards, stored value cards, digital wallets (mobile).

Classifications of EMIs

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

Minimum Systems and Controls

  • BSFI ensures robust management, administrative, accounting, and internal control mechanisms.
  • Properly designed and tested computer systems.
  • Security policies to protect data integrity and confidentiality.
  • Due diligence in accrediting E-money agents/partners.
  • Fraud risk management commensurate with EMI activities.
  • Adequate business continuity and disaster recovery plans.

E-money Issuance and Redemption

  • E-money must be issued and redeemed at face value (no discounts allowed).
  • Exempt from interest and incentives deemed convertible to cash.
  • Promotional incentives permitted, not tied to outstanding balance.

Consumer Protection

  • Adherence to Bangko Sentral guidelines regarding financial consumer protection.
  • Transparency and disclosure of E-money transactions.
  • Client information protection.
  • Fair treatment of E-money customers.
  • Recourse mechanisms for complaints.
  • E-money consumer asset protection against fraud.

Minimum Disclosure Requirements

  • Clear terms and conditions for E-money use.
  • Available through various channels (website, brochures, registration forms).

Interoperability of Systems

  • E-money platforms function interoperably by participating in Automated Clearing Houses (ACH).

Aggregate Limits

  • Implementing pre-defined limits/thresholds based on institutional risk assessment and customer due diligence.
  • Consist with payment system (PS) limits/thresholds.
  • Aggregated transactions when multiple E-money instruments are issued to one person.

Liquidity Requirement

  • BSFI maintains sufficient liquid assets to meet immediate redemption demands ensuring E-money holder protection.
  • Liquid asset levels equal to outstanding E-money issued for each currency.

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Lesson 9: Payment Services PDF

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