The Bangko Sentral ng Pilipinas (BSP) has introduced a new regulatory framework for merchant payment acceptance activities (MPAA) to expand the use of digital payments across the country. This move is encapsulated in BSP Circular No. 1198 that was approved on July 19.
Merchants, defined as physical or electronic retailers, service providers, billers, and businesses accepting payments for goods and services, are now classified as end-users who avail of MPAA.
These activities encompass services that enable merchants to receive payments, including merchant acquisition services, which involve processing payment transactions and transferring funds to the merchant.
The BSP framework emphasises the importance of a merchant being able to accept payment in various forms “in a safe and efficient manner”, to facilitate the smooth flow of funds in the economy and promote the broader adoption of digital payments.
To support the growth of digital payments, the circular establishes minimum standards and good practices to safeguard customer funds and protect the rights of end-users interacting with operators of payment systems (OPS) engaged in MPAA.
An OPS, as defined by the circular, is “any person who provides clearing or settlement services in a payment system, or defines, prescribes, designs, controls, or maintains the operational framework for the system.”
This typically includes business organisations such as sole proprietorships, partnerships, cooperatives, or corporations.
The framework mandates that OPS engaging in MPAA adopt governance structures and measures to manage risks associated with settlement, operations, information technology, anti-money laundering, counter-terrorism, proliferation financing, and end-user protection.
The circular outlines various requirements, including the granting of a license to conduct MPAA, capital requirements, governance, AML/CTPF requirements, merchant onboarding, monitoring and dispute resolution, end-user protection, information technology risk management, pricing mechanisms, outsourcing, reportorial requirements, and enforcement actions.
To conduct merchant acquisition services, entities must obtain a merchant acquisition license (MAL) and meet capital requirements based on their size. A merchant acquirer facilitates merchants’ acceptance of various payment instruments through their services.
OPS with MPAA transactions below P100 million during an applicable period must maintain a minimum capital of P5 million. If the transferred funds exceed P100 million, the required minimum capital is P10 million. License fees range from P25,000 to P60,000.
Entities holding an OPS-MAL are considered compliant with OPS registration requirements. The circular applies to BSP-supervised financial institutions, including banks and electronic money issuers, as well as non-bank financial institutions.
Featured image credit: Edited from Freepik
