BSP Sets Redress Standards for Electronic Fund Transfers

To foster trust and confidence in the use of digital payments, the Bangko Sentral ng Pilipinas (BSP) Monetary Board, through Circular No. 1195, approved the consumer redress mechanism for account-to-account electronic fund transfers (EFTs) under the National Retail Payment System (NRPS).


EFTs, synonymously used as electronic payments, are defined as “transfer of funds between two transaction accounts in the same or different BSP-Supervised Institutions (BSIs) which are initiated and received using electronic devices and channels to transmit payment instructions”.


The BSP’s priority under this Circular for the timely and appropriate resolution of consumer concerns of BSIs that offer EFTs shall be embodied in a new section for end-user protection in the Manual of Regulations for Payment Systems (MORPS).


The consumer redress standards shall apply to all clearing switch operators (CSOs), such as BancNet, Inc. and the Philippine Clearing House Corporation, participating banks and electronic money issuers (EMIs) of the InstaPay and PESONet Automated Clearing Houses (ACH), which provide domestic account-to-account EFTs, including Person-to-Person (P2P), Person-to-Merchant (P2M), and Person-to-Biller (P2B) payments. Dispute resolution involving the delivery of products and/or services underlying the payment transaction is not covered by the regulation. 


The following minimum requirements are expected to observe under the Circular:


  • Notification on EFTs

The originating financial institution (OFI) and the receiving financial institution (RFI) shall timely provide notifications to inform the sender and the beneficiary about the accurate status of the EFT. This is in line with NRPS’ mandate on the immediate credit to the beneficiary’s account within two (2) to three (3) seconds from receipt of clearing advice by the RFI from the clearing switch operator (CSO) for near-real time EFTs, and not more that two (2) hours from receipt of CSO advice for batched EFTs or not later than the next settlement cycle for multiple settlement cycles.


  • Return of Funds

For instant retail payments and corresponding use cases, the amount debited from the sender’s account shall be returned to the sender’s account within one (1) hour from receipt of sender instruction. This shall apply to rejected, returned, and timed-out transactions.


For batch clearing and settlement of electronic payments and corresponding use cases, return of funds to the sender’s account must be accomplished within two (2) hours from receipt of settlement report from the CSO for rejected and returned transactions.


For multiple-debit and unsuccessful transactions as a result of lapses in controls of the OFI, the return of funds must be done: (a) within one (1) hour from receipt of sended instruction for instant payments and corresponding use cases; and (b) within two (2) hours from receipt of settlement report from the CSO for batch clearing and settlement of payment items and corresponding uses cases.


Provisions for return of funds shall not apply to unauthorized or erroneous transactions.


  • Collection and Return of EFT Fee

The ACH operating guidelines must establish the criteria for collection and return of the EFT fees, as well as parameters for determination of liable entities that will shoulder any costs related to the EFTs affected. The OFI must return the collected EFT fee to the sender in accordance with the time frame specified in the preceding ‘Return of Funds’ section. The sender shall not bear fees for unsuccessful transactions, such as the ones due to disruption of operations of either the CSO or ACH Participants.


  • Disruption of Services and Operations

On the occurrence of unscheduled or unscheduled downtime, the CSO and ACH Participants shall notify interested parties in the transaction, such as the  appropriate BSP supervising department, ACH, ACH Participants, and end-users, about the updates on the status, reason, expected period, and eventual resolution of the service disruption.


  • Consumer Protection

ACH participants shall conform with applicable BSP regulations in handling unauthorized or erroneous transactions under the Regulation on Financial Consumer Protection to Implement the Financial Products and Services Consumer Protection Act (BSP Circular No. 1160).


A transitory period until December 31, 2024 is provided for the compliance with the provisions of this new regulation, coordination and approvals among ACHs and the Philippine Payments Management, Inc., and the issuance of the revised ACH operating guidelines.


The full copy of the Circular can be accessed here.


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