March 21, 2023

BSP revisits ban on e-money licenses

The Bangko Sentral ng Pilipinas (BSP) is considering lifting a two-year ban on the issuance of electronic money issuers (EMI) licenses earlier than expected.

The ban, which was imposed on Dec. 16, 2021, was put in place to allow the BSP to monitor the EMI sector and prevent misuse of e-money licenses. The ban will last until mid-December 2023.

However, BSP Deputy Governor Chuchi G. Fonacier said that the BSP has not yet made a decision on lifting the ban.

“We’re still assessing,” Fonacier added.

In November 2022, BSP Governor Felipe M. Medalla said they would study the selective lifting of the moratorium.

The BSP has two other options: remove the ban before December or extend the moratorium beyond two years to effectively eliminate scammers and prevent misuse of licenses.

Medalla specifically called out some EMI applicants who only applied to sell their licenses to others.

Last week, the BSP issued a new EMI circular that raised the required minimum capital for a firm with a 12-month large-scale operation of P25 billion from P100 million to P200 million.

Meanwhile, the minimum capital requirement for small-scale EMIs is P100 million.

Banks and non-bank financial institutions (NBFIs) have one year to comply with the revised rules.

EMIs are also to be reclassified as EMI-Banks and EMI-NBFIs, which used to be EMI-Others.

Circular No. 1166, which was issued on Feb. 7, is seen as more effective in managing the risks associated with e-money transactions, such as cybersecurity and money laundering.

The BSP defines e-money as electronically-stored cash in an instrument or device, such as cash cards, prepaid cards, stored value cards, or digital wallets accessible through mobile phones. All e-money accounts are non-interest-bearing, non-deposit transactions that are pre-funded by customers.

The revised guidelines expanded the definition of EMIs and took into consideration recent advances in digital technology. The circular also imposed higher liquidity and capital requirements for EMIs to protect account holders.

The BSP is currently supervising 70 licensed EMIs, with 29 being EMI-Banks owned by banks and 41 being EMI-NBFIs or owned by non-banks, such as GCash, PayMaya, and GrabPay.

As of end-2021, there were 27.5 million Filipinos with e-money accounts, compared to 5.7 million in 2019.