Rules for Digital Payments in Gov~t Funds

Policy, purpose, and coverage

The State policy is to promote efficient delivery of government services, expedite government transactions, boost revenue, and reduce risk of graft and corruption (Section 1.3(a)).
The State policy is to enable the use of digital payment services for a fast, convenient, secure, and transparent mode of delivering government services (Section 1.3(b)).
The State policy is to facilitate effective, expedient, and transparent distribution of financial assistance (Section 1.3(c)).
The State policy is to build an inclusive digital finance ecosystem that makes formal financial services accessible to vulnerable and underserved sectors (Section 1.3(d)).
The State policy is to develop human resources skilled in ICT and a population capable of operating and utilizing electronic appliances and computers (Section 1.3(e)).
The State policy is to bridge digital infrastructure gaps and ensure network security, connectivity, and neutrality of technology for national benefit (Section 1.3(f)).
All departments, agencies, and instrumentalities of the Executive Branch, including state universities and colleges, government-owned or -controlled corporations (Covered Agencies), are covered (Section 1.4).
Local government units (LGUs) are enjoined to be guided by the same guidelines for their respective disbursements and collections (Section 1.4).
Philippine Embassies and Consulates are covered through the Department of Foreign Affairs (Section 1.4).

Core definitions for implementation

Advise to Debit Account (ADA) is an authorization issued by a government entity that instructs Government Servicing Banks to debit a specified amount from the government’s available account balance to pay creditors/payees (Section 1.5(a)).
Authorized Government Depository Bank (AGDB) refers to banks where covered entities are allowed by law to deposit government funds and maintain depository accounts, or by exception, a bank allowed by the DOF and the Monetary Board to hold government deposits under prescribed rules (Section 1.5(b)).
Digital collection is the mode where a government entity receives payments from businesses, citizens, and individuals through digital devices, with payment methods including bank transfers, electronic money, and payment cards (Section 1.5(c)).
Digital disbursement is the mode where government disburses money or equivalent electronic representations of legal tender to pay government expenditures by crediting the recipient’s transaction account through ADA or Electronic Fund Transfer (EFT) facilitated by a Government Servicing Bank, or other allowed digital payment instruments (Section 1.5(d)).
Digital payment is a monetary payment transaction between two parties through a digital payment instrument where both payer and payee use an electronic channel (Section 1.5(e)).
Electronic Fund Transfer (EFT) is a transfer of funds between transaction accounts in the same or different BSP-supervised financial institutions, initiated and received using electronic devices and channels to transmit payment instructions (Section 1.5(f)).
Electronic money (e-money) is electronically-stored monetary value issued in accordance with BSP regulations (Section 1.5(g)).
Electronic Money Issuers (EMIs) are BSP-supervised financial institutions engaging in e-money business in accordance with BSP regulations (Section 1.5(h)).
Government Servicing Bank (GSB) is a bank authorized upon accreditation by the Monetary Board to accept government deposits and perform banking services on behalf of government entities (Section 1.5(i)).
Merchant Discount Rate is the percentage fee charged by a Payment Service Provider to a collecting entity for processing payment transactions (Section 1.5(j)).
National Retail Payment System (NRPS) is the policy and regulatory framework establishing a safe, efficient, and reliable retail payment system in the Philippines (Section 1.5(k)).
Payment Service Provider (PSP) is a bank or non-bank electronic money issuer that provides payment services to end-users including consumers, merchants, billers, and government institutions (Section 1.5(l)).
A Transaction account is a bank account or e-money account held with a BSP-supervised financial institution used to store, send, and receive funds (Section 1.5(m)).

Digital disbursements: duties and rights

All Covered Agencies shall utilize safe and efficient digital disbursement in paying goods, services, other disbursements, distribution of financial assistance, and payment of salaries, wages, allowances, and other compensation (Section 2.1).
Covered Agencies may disburse funds directly into recipients’ transaction accounts whether held in government or private financial institutions (Section 2.1).
Covered Agencies must develop and implement streamlined internal procedures for digital disbursements using ADA and interoperable EFT, including a process to verify the correctness of the transaction account and account number so it belongs to the intended recipient (Section 2.2(a)).
Covered Agencies must prepare and be accountable in the accuracy of payment instructions, including beneficiary name, transaction account details, and the amount involved (Section 2.2(b)).
Covered Agencies must establish a public assistance mechanism for inquiries/concerns on digital disbursements and for requests for assistance in opening transaction accounts for unbanked recipients/beneficiaries (Section 2.2(c)).
Covered Agencies must disburse the full amount of cash assistance into the recipient/beneficiary transaction account and may top-up the disbursement with a maximum of P50.00 per beneficiary, and up to a maximum of P100 for beneficiaries located in Geographically Isolated and Disadvantage Areas (GIDA), provided there is appropriation or other legal funding source (Section 2.2(d)).
The top-up is intended to cover cash out fees incurred in receiving the cash assistance, such as ATM withdrawal fees and agent cash-out fees (Section 2.2(d)).
Covered Agencies must develop policies, procedures, and guidelines for maintaining accuracy of databases containing transaction account details of recipients/beneficiaries, including procedures for reversal of wrongly credited payment in coordination with the GSB (Section 2.2(e)).
Covered Agencies must perform other functions as may be prescribed by the Technical Working Group (TWG) of EO No. 170 (Section 2.2(f)).
GSBs must execute payment instructions in accordance with ADA settlement periods under the service level agreement and in accordance with EFT processing time under the rules of the Automated Clearing House (ACH) and BSP regulations (Section 2.3(a)).
GSBs must submit to the disbursing government entity a verified list of successful or failed transfers with relevant details, including recipient/beneficiary information, transaction account details (bank/branch or e-money issuer and account number), and amount due (Section 2.3(b)).
GSBs must transmit reports on successful or failed transfers two business days after the disbursement (Section 2.3(b)).
Subject to service level agreements guided by standard provisions defined by the TWG, GSBs may collect fees from Covered Agencies for EFT services (Section 2.3(c)).
GSBs must notify the disbursing government entity of expected service disruptions that may cause delays and must issue public notice in relevant channels, including social media, to guide those expecting disbursements (Section 2.3(d)).
Recipients/beneficiaries have the right to choose and nominate the transaction account where Covered Agencies disburse funds, provided the institution is a participating receiving entity of an interoperable EFT scheme and the account may be held in a government or private financial institution (Section 2.4(a)).
Recipients/beneficiaries have the right to rectification of inaccuracy or error in their transaction account details and to have it corrected immediately and accordingly unless otherwise unreasonable; Covered Agencies must ensure accessibility of both new and retracted information and simultaneous receipt by GSBs (Section 2.4(b)).
Recipients/beneficiaries have the right to adequate information regarding digital payment of government disbursements, including distribution of financial assistance (Section 2.4(c)).
Covered Agencies must provide in their Public Service Continuity Plan policies and procedures for calamities or emergencies when digital payments cannot be fulfilled after exhausting all possible means, allowing non-digital payout channels in exigency of service (Section 2.5).
Covered Agencies and GSBs must ensure compliance with RA No. 10173 (Data Privacy Act of 2012), its implementing rules and regulations, and relevant National Privacy Commission issuances in implementing EO No. 170 and this IRR (Section 2.6).

Digital collections: PSP selection and remittance

All Covered Agencies are mandated to offer a digital mode of collecting payments for taxes, fees, tolls, and other charges and impositions (Section 3.1).
Covered Agencies must accept cash and other traditional payment modes in addition to digital modes and must not discount them (Section 3.1).
Covered Agencies must utilize secure payment processing solutions to ensure acceptance of various digital payment methods (Section 3.2).
Covered Agencies may engage established PSPs, but only interoperable digital payment solutions compliant with the National Retail Payment System Framework must be availed (Section 3.2).
The partner PSP of Covered Agencies is not limited to Government Servicing Banks, subject to existing laws, rules, and regulations (Section 3.2).
PSPs must define processes and ensure issuance of Acknowledgement Receipts for payments made through digital platforms (Section 3.3(a)).
PSPs must process personal and sensitive personal information in accordance with RA No. 10173, its implementing rules and regulations, and relevant National Privacy Commission issuances (Section 3.3(b)).
PSPs must perform responsibilities under Standard Terms of Reference or Standard Minimum Terms and Conditions issued by the TWG, including standards on timely processing of payments and appropriate recourse/support for issues and concerns of Covered Agencies and the transacting public (Section 3.3(c)).
PSPs must remit or deposit intact the full amount of collections due to the government to the appropriate AGDB within the next banking day from the collection date or within the period prescribed by the TWG (Section 3.3(d)).
PSPs must provide a reporting facility where government agencies can view and download collection details in real-time (Section 3.3(e)).
Covered Agencies must define the process for electronic issuance of invoice and/or billing number for on-time and late payments of taxes, fees, tolls, and other charges and impositions (Section 3.4(a)).
Covered Agencies must ensure payment channels are adequate, visible, available, and accessible to the transacting public (Section 3.4(b)).
Covered Agencies must promote and encourage use of digital payment channels and provide adequate support to the transacting public (Section 3.4(c)).
Covered Agencies must ensure compliance with existing applicable regulations on electronic collection (Section 3.4(d)).
Covered Agencies must perform other functions as may be prescribed by the TWG (Section 3.4(e)).

Technical Working Group: composition and powers

A TWG shall be constituted pursuant to Section 5 of EO No. 170 composed of representatives from DOF, DBM, BTr, BIR, and the Government Procurement Policy Board (GPPB) Technical Support Office (Section 4.1).
Each member agency head must designate a permanent representative with rank not lower than an Assistant Secretary or equivalent within 15 days from the effectivity of the IRR (Section 4.2).
Alternate representatives with rank not lower than Director IV or equivalent must be endorsed by the head of each agency (Section 4.2).
Permanent/alternate representatives oversee their respective agency’s overall efforts in implementing EO No. 170 and this IRR (Section 4.2).
The TWG may develop and drive implementation strategies and programs for effective and cost-efficient procurement of PSP and other digital collection services for government including LGUs, including review and/or negotiation of transaction fees and standard merchant discount rates for government payments and determination of proper Approved Budget for the Contract (ABC) where necessary (Section 4.3(a)).
The TWG provides guidance on standard provisions in service level agreements or memoranda of agreement between GSBs and Covered Agencies for digital disbursements (Section 4.3(b)).
The TWG oversees and monitors procurement of digital payment solutions by Covered Agencies to ensure compliance with existing laws, rules, and regulations (Section 4.3(c)).
The TWG considers formulation of standard terms and conditions for PSPs in consultation with BSP and COA and the GPPB may issue specific procurement guidelines for engagement of PSPs if necessary in line with Section 63 of Republic Act No. 9184 (Section 4.3(d)).
The TWG develops principle-based guidelines covering standardization of successful/failed transfer reports, consumer assistance and complaints handling, generation/issuance/recognition of electronic official receipts, preparation of payment instruction, measures to prevent double disbursements, and progress reports on collection and disbursements (Section 4.3(e)).
The TWG resolves issues relative to implementation without prejudice to individual member agencies resolving concerns under their respective mandates (Section 4.3(f)).
The TWG develops operational readiness criteria and capability assessment for adoption of digital payments for government collections (Section 4.3(g)).
The TWG develops and implements a communication and advocacy plan in coordination with the Communication Working Group of the Financial Inclusion Steering Committee, including briefing Covered Agencies on EO No. 170 goals/requirements and educating the public on owning transaction accounts and using digital payments through information campaigns and financial literacy programs (Section 4.3(h)).
The TWG may call on departments, agencies, or offices under the Executive Branch for effective implementation of EO No. 170 (Section 4.3(i)).
The TWG develops, recommends, and/or implements enforcement mechanisms for full compliance by Covered Agencies (Section 4.3(j)).
The TWG performs other functions directed by the President (Section 4.3(k)).
The TWG is chaired by the permanent representative of the BTr (spelled as “BTs” in the Rules) and membership consists of permanent and alternate members of other agencies (Section 4.4).
The BTr serves as the TWG Secretariat and may request BSP and other agencies’ assistance for agenda setting and coordination with industry and stakeholders (Section 4.4).
The TWG Secretariat liaises and coordinates TWG activities, prepares agendas and minutes, receives and consolidates Covered Agencies’ transition plan submissions, develops and maintains monitoring and evaluation systems for transition plan status, and maintains documents/records and timely furnishing to TWG members (Section 4.5).
The Rules create an Advisory Body to the TWG including COA, DICT, DILG, and Philippine Payments Management, Inc. (PMMI); Advisory Body members have no voting rights (Section 4.6).
Regular TWG meetings are held at least once every quarter, and special meetings may be convened by concurrence of the Chairman upon special circumstances (Section 4.7).
Quorum requires representation from three out of five member agencies (Section 4.7).

Transition period and transition plans

All Covered Agencies must ensure proper transition of their disbursement and collection procedures and policies to accommodate digital payments while ensuring continuous delivery of public services, particularly acceptance of non-digital modes during transition (Section 5.1).
Covered Agencies must fully implement digital disbursements within six (6) months from the effectivity date of the IRR (Section 5.1).
Digital collections use a transition period not exceeding three (3) years based on operational readiness and capability (Section 5.1).
A tiering structure applies for operational readiness and capability assessment:
- Covered agency already offering digital collections through a payment gateway or collection agreement has a transition period of Within 1 year.
- Covered agency not yet offering digital collections has a transition period of More than 1 year but less than 3 years (Section 5.1).
Each Covered Agency must assign a payments digitalization team headed by a senior official with rank not lower than Assistant Secretary or its equivalent to coordinate and oversee the entire process (Section 5.2).
The constitution of payments digitalization teams and the names of their heads must be submitted to the TWG Secretariat within 15 days from the effectivity of the IRR (Section 5.2).
The transition plan must include an action plan with indicative timeliness to fully implement digital payments, a strategy for capacity development (including cybersecurity and data privacy protection tools), and key performance indicators and targets (Section 5.2).
The transition plan must be officially transmitted by the head of agency to the TWG through the Secretariat within 60 days after the effectivity of the IRR (Section 5.3).
The TWG uses the transition plan as basis for monitoring compliance and may recommend adjustments whenever necessary in line with EO No. 170 requirements and objectives (Section 5.3).

Funding and support; monitoring outcomes

Initial implementation funding must be sourced from existing appropriations for NGAs and from respective corporate funds of GOCCs subject to availability and existing budgeting, accounting, and auditing rules (Section 6.1).
Subsequent year amounts must be included in the budget proposals of Covered Agencies subject to the annual budgetary process (Section 6.1).
Initial and subsequent implementation costs include reasonable expenses for establishing and maintaining infrastructure and systems relating to digital payments, including transaction fees, and other expenses incurred for implementation (Section 6.1).
DICT, DTI, and DILG must aid in capacity building of Covered Agencies relative to adoption of digital payments and may coordinate with BSP, PPMI, and other stakeholders to develop capacity building programs (Section 7.1).
DICT must take appropriate measures to ensure adequate internet connectivity supporting government programs and policies on digitalization of financial transactions (Section 7.2).
Each agency must submit to the TWG and COA, through the Secretariat, a bi-annual report containing progress of transition plan initiatives, updates on key performance indicators and targets (including percentage of payment transactions converted to digital form), and problems encountered with actions taken and recommended ways forward (Section 8.1).
The DILG, in assessing LGUs for the granting of the Seal of Good Local Governance, shall accord meritorious consideration to an LGU’s initiative to comply with EO No. 170 and this IRR (Section 8.2).

Final provisions: separability and repeal

If any provision of the IRR is declared invalid or unconstitutional, the remaining provisions continue in full force and effect (Section 9.1).
All issuances, rules, and regulations or parts inconsistent with the IRR are repealed, amended, or modified accordingly (Section 9.2).
The IRR takes effect immediately upon its publication in the Official Gazette or in a newspaper of general circulation (Section 9.3).