Issuer, title, issuance date, effectivity
- BSP Circular No. 649, s. 2009 is titled “Guidelines Governing the Issuance of Electronic Money (E-Money) and the Operations of Electronic Money Issuers (EMI) in the Philippines.”
- The circular is adopted on 9 March 2009.
- The circular takes effect fifteen (15) days following its publication in the Official Gazette or any newspaper of general circulation (Section 10).
- Transitional compliance is required under Section 9 for existing authorities granted before the circular’s effectivity.
Definitions and EMI classification
- E-money means monetary value as represented by a claim on its issuer that is:
- electronically stored in an instrument or device;
- issued against receipt of funds of an amount not lesser in value than the monetary value issued;
- accepted as a means of payment by persons or entities other than the issuer;
- withdrawable in cash or cash equivalent; and
- issued in accordance with BSP Circular No. 649, s. 2009 (Section 2).
- An electronic money issuer (EMI) is classified as:
- EMI-Bank (banks);
- EMI-NBFI (non-bank financial institutions supervised by the BSP); and
- EMI-Others (non-bank institutions registered with the BSP as a money transfer agent under Section 4511N of the MORNBFI).
- “Electronic instruments or devices” include cash cards, e-wallets accessible via mobile phones or other access device, stored value cards, and other similar products (Section 2).
- E-money issued by banks is not considered as deposits (Section 2).
Prior approval, registration, and eligibility
- A bank planning to be an EMI-Bank must apply under Section X621 of the Manual of Regulations for Banks (MORB) on guidelines for electronic banking services, and under Section X169 of the MORB on outsourcing of banking functions, when applicable (Section 3).
- An NBFI planning to be an EMI-NBFI must comply with Section X621 of the MORB (made applicable), and Section 4190Q/S/P/N of the MORNBFI, when applicable (Section 3).
- A non-bank institution planning to be an EMI-Others must register with the BSP as a money transfer agent under Section 4511N of the MORNBFI (Section 3).
- To qualify as EMI-Others, the non-bank institution must comply with the additional requirements detailed in Section 5; if already registered as a money transfer agent, it must meet the additional requirements to qualify as EMI-Others (Section 3).
Uniform operational provisions for all EMIs
- Aggregate monthly load limit: E-money instrument issuance is subject to an aggregate monthly load limit of P100 thousand, unless a higher amount is approved by BSP (Section 4(A)).
- Consolidation across instruments: If an EMI issues multiple e-money instruments to a single e-money holder, the total loaded across all instruments must be consolidated for compliance with the aggregate monthly load limit (Section 4(A)).
- Record-keeping and transaction monitoring: EMIs must maintain accurate and complete records of:
- e-money instruments issued,
- the identity of e-money holders, and
- individual and consolidated balances,
and must have capability to monitor movement of e-money transactions and link instruments issued to common holders (Section 4(B)).
- Misreporting consequence: The susceptibility of the system to intentional or unintentional misreporting of transactions and balances constitutes sufficient ground for BSP sanctions, as applicable (Section 4(B)).
- Redemption at face value: E-money may be redeemed only at face value; it must not earn interest or rewards convertible to cash, and it must not be purchased at a discount (Section 4(C)).
- No deposit character and no PDIC insurance: E-money is not considered a deposit and is therefore not insured with the Philippine Deposit Insurance Corporation (Section 4(C)).
- Issuer identification: E-money instruments must clearly identify the issuer ultimately responsible to e-money holders; EMIs must communicate this to the client, and the client must acknowledge it in writing (Section 4(D)).
- AML compliance responsibility: EMIs must ensure their distributors/e-money agents comply with all applicable Anti-Money Laundering laws, rules, and regulations (Section 4(E)).
- Customer complaints redress: EMIs must provide an acceptable redress mechanism to address customer complaints (Section 4(F)).
- Written disclosures and consumer guidance: EMIs must:
- disclose in writing, and require customer signification of agreement, to the issuer-identification information required under Section 4(D) (Section 4(G));
- provide clear guidance in English and Filipino on the customer’s right of redemption, including conditions and fees for redemption, if any (Section 4(G));
- provide information on available redress procedures for complaints, including the issuer’s address and contact information (Section 4(G)).
- Minimum systems and controls before issuance: Prior to issuance, EMIs must ensure:
- sound and prudent management, administrative and accounting procedures, and adequate internal control mechanisms;
- properly-designed computer systems thoroughly tested prior to implementation;
- appropriate security policies and measures to safeguard integrity, authenticity, and confidentiality of data and operating processes;
- adequate business continuity and disaster recovery plan; and
- effective audit function for periodic review of the security control environment and critical systems (Section 4(H)).
- Quarterly supervisory data submissions: EMIs must provide the BSP Supervisory Data Center of the Supervision and Examination Sector BSP quarterly statements covering, among others, investments, volume of transactions, total outstanding e-money balances, and liquid assets in a form as may be prescribed later (Section 4(I)).
- Notification of facility changes: EMIs must notify BSP in writing of any change or enhancement in the e-money facility thirty (30) days prior to implementation (Section 4(J)).
- Approval requirement for expanding/changing scope: If the change or enhancement requires prior BSP approval, it must be evaluated; changes that expand scope or change the nature of the e-money instrument require prior approval of the Deputy Governor, Supervision and Examination Sector (Section 4(J)).
- Examples of changes needing prior approval: Changes/enhancements may include:
- additional capabilities such as access to new channels (e.g., inclusion of an internet channel in addition to merchant Point of Sale terminals);
- change in technology service providers and other major partners (excluding partner merchants);
- other changes or enhancements (Section 4(J)(1)-(3)).
Additional rules for EMI-Others
- EMI-Others must be a stock corporation with minimum paid-up capital of P100 million (Section 5(A)).
- EMI-Others must engage only in the business of e-money and related or incidental activities such as money transfer/remittance (Section 5(B)).
- Existing entities engaged in activities not related to e-money must act as EMI-Others through a separate entity incorporated exclusively for that purpose (Section 5(B)).
- EMI-Others must not engage in the extension of credit unless it complies with Section 6 of the circular (Section 5(C)).
- Liquid assets requirement: EMI-Others must have sufficient liquid assets equal to the amount of outstanding e-money issued; the liquid assets must remain unencumbered (Section 5(D)).
- Forms of liquid assets: Liquid assets may take any of the following forms:
- bank deposits separately maintained for liquidity purposes;
- government securities set aside for the purpose;
- other liquid assets as BSP may allow (Section 5(D)).
- Inspection and confidentiality waiver: Records pertaining to the liquid assets must be available for BSP inspection at any time, and the confidentiality of bank deposits and government securities is waived (Section 5(D)).
- BSP access rights: BSP may access and review the EMI-Others e-money systems and databases; when warranted, access extends to agents, partners, service providers, or outsourced entities due to participation in the e-money business (Section 5(E)).
- Audited financial statements deadline: EMI-Others must submit audited financial statements to the BSP Supervisory Data Center within thirty (30) days from the date of report of its external auditors (Section 5(F)).
Quasi-banking license for lending activities
- EMI-NBFIs and EMI-Others that engage in lending activities must secure a quasi-banking license from the BSP (Section 6).
Sanctions and penalties for violations
- Issuing e-money without prior BSP approval: EMIs committing this violation incur penalties applicable under Sections 36 & 37 of Republic Act No. 7653, and owners/partners/principal officers are subject to watchlisting (Section 7(1)).
- AML-law violation: Violations of Republic Act No. 9160 (Anti-Money Laundering Law of 2001 as amended by Republic Act No. 9194) and its implementing rules and regulations are subject to penalties prescribed under the Act (Section 7(2)).
- Violation of the circular: Violations of provisions of BSP Circular No. 649, s. 2009 result in penalties and sanctions under the cited laws, rules, and regulations (Section 7(3)).
- Misreporting triggers BSP action: Susceptibility of the system to intentional or unintentional misreporting of transactions and balances provides sufficient ground for appropriate BSP action or imposition of sanctions whenever applicable (Section 7).
Incorporated amendments and transitory compliance
- Section X621 and related subsections of the MORB on electronic banking are incorporated into the MORNBFI as Section 4621 Q/S/P/N and related subsections (Section 8).
- Existing issuers may continue: EMI-Banks, EMI-NBFIs, and EMI-Others granted authority to issue e-money before the circular may continue exercising such authority if they submit to BSP within one (1) month from the circular’s effectivity a certification signed by the President or an Officer with equivalent rank confirming compliance with applicable requirements (Section 9).
- Non-compliance remediation plan: If not in compliance, the same one (1) month period is used to submit measures with corresponding timelines to conform to provisions not complied with, subject to BSP approval (Section 9).
Related legal framework and legal cross-references
- BSP sanctions for certain violations expressly tie into Republic Act No. 7653 (Sections 36 & 37), Republic Act No. 9160, and Republic Act No. 9194 (Section 7).
- Eligibility and implementation cross-reference:
- MORB Section X621 (electronic banking services),
- MORB Section X169 (outsourcing of banking functions),
- MORNBFI Section 4511N (registration as money transfer agent),
- MORNBFI Section 4190Q/S/P/N (as applicable),
- and MORNBFI Section 4621 Q/S/P/N as an incorporated amendment (Sections 3, 8).