The Bangko Sentral ng Pilipinas (BSP) has issued a new circular to protect customers and merchants when engaging with operators of payment systems (OPS). The Regulatory Framework for Merchant Payment Acceptance Activities (MPAA) is designed to set tighter standards and best practices.
The framework aims to streamline financial transactions and boost user confidence in digital payments by establishing clear guidelines for governance, risk management, and reporting requirements.
MPAA involves services that allow merchants to receive payments in exchange for goods and services. This includes services like merchant acquisition, enabling the acceptance of payment instruments, and the secure collection, transmission, and processing of payment information. It also covers related support services.
With merchant payments making up 64.9% of digital transactions in 2023, the BSP’s new framework emphasizes the need for OPS involved in MPAA to implement strong governance structures and risk management measures. These measures are intended to address risks associated with settlement, operations, information technology, anti-money laundering, counter-terrorism financing, and end-user protection.
Need for a BSP license
Under the new circular, OPS involved in or planning to engage in merchant acquisition must obtain a license from the BSP. Merchant acquisition refers to the process of accepting and processing payment transactions on behalf of a merchant, leading to the transfer of funds to the merchant.
For OPS engaged in MPAA activities other than merchant acquisition, registration with the BSP is required as per Section 502 of the Manual of Regulations for Payment Systems.
Failure to comply with these requirements will result in enforcement actions by the BSP under the National Payment Systems Act and the New Central Bank Act, as amended.
The Payments Supervision and Licensing Department of the BSP will handle the processing of Merchant Acquisition License applications and oversee supervision and examination activities. The BSP remains committed to working with the payments industry to foster a safe, efficient, secure, and reliable payment system.