Non-Banks Have Two Weeks To Apply For e-Money Licence In Philippines

November 30, 2021
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The Philippines central bank has imposed a two-year moratorium on electronic money issuer licences to non-banks, starting from December 15.

  • Philippines issues second moratorium
  • Vietnam moves ahead with mobile money pilot

The Philippines central bank has imposed a two-year moratorium on electronic money issuer licences to non-banks, starting from December 15.

The Bangko Sentral ng Pilipinas (BSP) released a memorandum, stating that e-money licensing will be closed for non-bank financial institutions for two years.

The moratorium is “in line with the Bangko Sentral’s efforts to ensure that its resources are managed and mobilised judiciously in a manner that promotes financial stability and inclusive growth, and advances the development of innovative e-money solutions that offer strong value propositions,” the bank said in the document.

The bank will accept applications until December 15, but stressed that those applications that are not complete or have deficiencies in their documentation will be sent back to the companies and considered closed.

However, the central bank will keep its test-and-learn regulatory framework open and non-bank e-money applicants with new business models, new technologies or serving underserved or niche products may apply for an exemption from the ban.

Media reports cited BSP deputy governor Chuchi G. Fonacier as saying that the ban will allow the central bank to monitor the e-money sector and to ensure financial stability. “BSP is currently assessing the impact of the number of players on the overall development of this segment in the industry,” Fonacier said.

The agency is currently supervising 29 bank and 34 non-bank e-money issuers, including AliPay.

Earlier in August, the central bank imposed a similar moratorium on the licensing of digital banks, a move that limited the number of digital bank licences to six in the country. The temporary halt took effect on August 31 and will last for three years.

E-money growing fast in the Philippines

E-money providers, particularly telecom companies, have played a key part in digitalising payments in the Asian country.

Between 2016 and 2020, the number of e-money transactions grew by a compound annual growth rate of 43 percent to 1.65bn. This represents 63 percent of the total non-cash transactions, and roughly twice the rate of regional neighbours Indonesia and Malaysia.

Digital payments are expected to expand significantly over the next few years supported by new modernised instant payment infrastructure, Instapay 2.0, which launched in early 2021.

In October, the central bank also announced the next step in the country’s digital transformation journey, the expansion of the country’s QR payment service to enable merchants to accept payments for their goods and services across the new instant payments network.

Although participation in Instapay 2.0 is open to both traditional financial institutions as well as e-money institutions — it is expected that the latter's share of payments will come under increasing threat from the banks.

Vietnam issues mobile money licence

While the Philippines was looking to restrict e-money licences, across the South China Sea in Vietnam, the bank association announced that Vietnam Posts and Telecommunications Group (VNPT) had been chosen to run a nationwide pilot for a mobile money service.

The licence represents an important step for Vietnam in moving toward a cashless payment market. The shift for VNPT from traditional telecommunications to digital services will help promote mobile payments, increase socio-economic development and close the digital divide, according to the announcement.

VNPT noted that it is using leading technologies of the banking and telecommunications industries including eKYC, AI/ machine learning, QR code and NFC contactless payment solutions.

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