PHL rolls out interoperable direct debit facility and Instapay for businesses

By Katherine K. Chan, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) and the Philippine Payments Management, Inc. (PPMI) have rolled out the Philippines’ first interoperable direct debit facility and introduced a real-time fund transfer facility for businesses.

“Interoperability and lower fees do more than lift transactions. They bring in more people. This is what financial inclusion looks like,” BSP Governor Eli M. Remolona, Jr. said in a statement.

“More Filipinos sending and receiving money digitally. More Filipinos making the network stronger for everyone already on it.”

Direct Debit PH is a standardized recurring payment facility under the National Retail Payment System that allows consumers to automatically pay their recurring bills from their financial accounts.

“Direct Debit PH lets you authorize automatic payments once and your recurring payments are handled for you, every cycle, across participating financial institutions,” BSP Deputy Governor Mamerto E. Tangonan said during the launch ceremony at the BSP Head Office in Manila on Wednesday. “No more manual transfers. No more late fees. No more forgetting.”

Under the direct debit arrangement, billers can directly and automatically pull out funds from payors’ bank accounts to settle recurring payments on set due dates.

Billers only have to acquire a one-time authorization from payors through a formal mandate, although the latter may opt to cancel the arrangement as long as it meets the mandate terms and the participating bank’s policies.

“Once a mandate is activated, payments can be processed automatically on agreed dates helping customers avoid missed payments while allowing businesses to manage collections more efficiently,” the central bank said. “This new use case serves as a digital alternative to traditional payments such as post-dated checks.”

This direct debit facility can facilitate transactions across different financial institutions as it allows customers to pay a biller holding an account with a different bank.

This includes settling bills such as utilities, subscriptions, loan payments, insurance premiums, among others.

Enrolled payors will be notified by their financial institution of all successful and rejected payments through e-mail, text message, or push notifications.

Direct Debit PH Interim Chair Carlo B. Nazareno said the facility was designed to be “consumer-friendly” as it provides payors the flexibility to set the mandate’s validity period and the maximum allowable amount to be debited from their accounts.

“(In) the end, you should have full control over what you agree and don’t agree with. And again, aside from the flexibility, you can put the maximum of how much can be debited. And you can give a deadline,” he said at a press briefing.

Mr. Nazareno also assured customers that the facility is safe, with participating institutions guaranteeing compliance with industry standards and the BSP’s regulations.

Since early this year, four universal banks have joined the live pilot of Direct Debit PH, namely, BDO Unibank, Inc., Bank of the Philippine Islands, China Banking Corp., and Rizal Commercial Banking Corp. (RCBC).

According to Mr. Nazareno, 16 other domestic and foreign banks, such as Metropolitan Bank and Trust Co. and Security Bank Corp., are in the developing stage, with PESONet seeking to onboard its over 120 member banks.

To qualify as a creditor or debtor bank in the direct debit facility, one must be a BSP-regulated financial institution, signatory to the Direct Debit PH Automated Clearing House Agreement, direct participant or have a sponsoring participant with PhilPass Plus Demand Deposit Account, and member of the PPMI.

Mr. Tangonan said he hopes Direct Debit PH will bring more billers into the system, including utility providers, telephone and mobile companies, as well as insurance and property firms.

INSTAPAY SERVICES
Meanwhile, automated clearing house InstaPay also launched its fund transfer facility for businesses, which allows 24/7 real-time business-to-consumer and business-to-business payment transactions.

Using InstaPay for Business, businesses and enterprises with business or corporate accounts can transfer up to P500,000 per transaction, with no daily transaction or value limit. This is higher than the P50,000 cap set for person-to-person InstaPay transfers.

“Originating financial institutions (OFIs) may impose and enforce their own transaction limits. Meanwhile, receiving financial institutions (RFIs) validate configured limits and may conduct post-validation checks, with the results relayed directly to the OFI,” the central bank said.

According to the BSP, OFIs may set their own transfer fees for InstaPay for Business.

As of July 29, InstaPay for businesses is only available through the Philippine National Bank, Wise Pilipinas Inc., DCPay Philippines, Inc., GoTyme Bank Corp., and RCBC.

Enrique C. Buenaflor, working group lead for InstaPay for Business, said 12 other financial institutions, including major industry players, have also expressed interest to offer the facility.

Additionally, InstaPay launched its own cash-in feature, which allows users to request money transfer from their OFI using their RFI’s platform.

“Unlike other fund transfer services, where the transaction is initiated through the platform or application (app) of the OFI, InstaPay Cash-In allows users to initiate the transfer request through the platform or app of the RFI,” the BSP said.

“This initiative widens the network of cash-in services beyond the existing bilateral agreements of financial institutions, consequently increasing digital payments usage and bringing down the barriers to adoption,” it added.

Meanwhile, the BSP now stands “doubly confident” that it will hit, or even potentially exceed, its digital payments target by 2028 following the launch of the new digital payment services, and the industry’s recent move to lower retail fund transfer fees.

Mr. Tangonan noted that the transaction volumes from the pilot launch of the services have boosted their confidence that the digital payment industry will grow past their target.

“And then we have the (Circular No.) 1238 that brings down the (retail fund transfer) fees and thanks to my colleagues here, their own banks, they like zeroized it. It makes me doubly confident that we will hit that target and even exceed it,” he added.

The BSP wants digital payments to make up 60%-70% of the total volume of retail payments by 2028 in line with the Philippine Development Plan.