BSP issues rules on merchant payment acceptance

The Bangko Sentral ng Pilipinas (BSP) has issued rules on merchant payment acceptance activities in bid to further safeguard funds of both merchants and customers.

In a statement on Tuesday, the BSP said it issued Circular No. 1198 on July 19, 2024.

The circular refers to the Regulatory Framework for Merchant Payment Acceptance Activities (MPAA).

The central bank said the framework “aims to establish standards and best practices to safeguard customer funds and protect merchants’ rights when dealing with operators of payment systems (OPS) engaged in MPAA.”

The BSP defines MPAA as services provided to a merchant to receive payment in exchange for goods and services. 

“These include merchant acquisition, providing the means to accept payment instruments and collect, secure, transmit, and process payment information; and providing support services related to the payment,” it said.

The central bank said merchant payments accounted for 64.9% of digital transactions in 2023.

With this, the BSP said the latest framework aims to ensure that OPS engaged in MPAA adopt governance structures and measures to effectively manage risks attendant to their business model.

“These include risks related to settlement, operations, information technology, anti-money laundering, counter-terrorism financing, counter-proliferation financing of weapons of mass destruction, and end-user protection,” it said.

“The framework, which seeks to smoothen flows for financial transactions, is also seen to enhance end-user confidence in digital payments by laying down governance, risk management, and reportorial requirements,” it added.

Under the circular, an OPS engaged in or intending to engage in merchant acquisition must obtain a license from the BSP. 

Merchant acquisition refers to the service of accepting and processing payment transactions on behalf of a merchant under an agreement, resulting in a transfer of funds to the merchant, according to the BSP.

The framework provided that an OPS engaged in or intending to engage in MPAA other than merchant acquisition shall register with the BSP in accordance with Section 502 of the Manual of Regulations for Payment Systems.

For example, an OPS, such as a bank or digital wallet, providing payment services to a merchant —i.e. online platforms like Shopee or Lazada— shall have mechanisms in place to ensure safety of end-users (merchants) availing of its services.

The central bank said that non-compliance with the requirements shall be subject to the BSP’s enforcement actions under the National Payment Systems Act and the New Central Bank Act, as amended.

“The Payments Supervision and Licensing Department of the BSP will be responsible for processing the applications for the Merchant Acquisition License and other supervision or examination activities,” the BSP said.

“The BSP shall continue to work with the payments industry to develop an enabling regulatory environment to ensure a safe, efficient, secure, and reliable payment system,” it added.—AOL, GMA Integrated News