Bangko Sentral closes all e-money applications for 2 years in EMI licensing

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The Bangko Sentral ng Pilipinas (BSP) has imposed a two-year moratorium on the issuance of electronic money issuer (EMI) licenses to non-bank financial institutions but has given them until December 15 to file their applications with the regulator.

BSP Governor Benjamin ­Diokno stated that the Monetary Board has approved policy measures in handling non-bank applications to operate as EMI-others, to ensure that its resources are managed and mobilized judiciously in a manner that promotes financial stability and inclusive growth, as well as advances the development of innovative electronic money solutions with strong value propositions.

“In this regard, the regular application window for new EMI-others licenses for non-bank financial institutions shall be closed for two years, starting Dec. 16, 2021,” Diokno said.

According to the BSP head, all applications submitted through December 15 will be handled on a first-come, first-served basis and will be evaluated for completeness and adequacy of documents or information, as well as conformity with the license standards.

Non-bank EMI applicants are expected to guarantee compliance with the documentation and chartering pre-qualification standards, according to Diokno, and applications with highlighted faults will be returned and no longer processed.

Furthermore, the two-year ban, according to BSP Deputy Governor Chuchi G. Fonacier in a text message on Friday, Nov. 19, will allow the BSP to monitor the EMI industry and guarantee financial stability.

“BSP is currently assessing the impact of the number of players on the overall development of this segment in the industry,” Fonacier explained.

The memorandum applies to EMI-Others, which are non-bank institutions that are registered with the BSP as money transfer agents. Other entities that issue e-money are known as EMI-Banks and EMI-NBFIs (non-bank financial institutions).

According to the memo, the decision to end the application window for non-bank EMI-Others is to ensure that resources are handled and “mobilized judiciously,” as well as to facilitate the development of “innovative e-money solutions with strong value propositions.”

Benjamin ­Diokno stated that interested new non-bank EMI applicants with proposals involving new business models as well as unserved, targeted niches, and new technologies could request an exception under the Test-and-Learn or Regulatory Sandbox framework to be able to participate in the digital payments and financial ecosystem.

“The BSP may limit the total number of entities that will avail themselves of the test and learn pathway, taking into account the total number of applications received and assessment of the overall banking and payment system situation,” Diokno said.

The BSP is in charge of 34 registered and regulated non-bank EMIs, including GCash, PayMaya, and GrabPay, as of the end of September this year. The BSP is also keeping an eye on 29 bank-owned EMIs.

E-money is defined as electronically-stored currency in an instrument or device such as cash cards, e-wallets, or other access devices. It is also withdrawable in cash or cash equivalent, according to the BSP. It is “issued upon receipt of money of an amount not less in value than the monetary value issued and acknowledged as a method of payment by individuals or entities other than the issuer.” E-money kept by EMI-Bank, on the other hand, is not considered a deposit.

There will be 84,299 e-money agents in the nation by the end of 2020, up from 35,959 at the end of 2019.

According to the BSP’s most recent inclusive digital finance data, the number of active e-money accounts reached 34.7 million as of end-2020, increasing 93.3 percent from 17.9 million the previous year.

Last year, e-money transactions totaled 501 million in inflows and 1.2 billion in outflows, representing an increase of 180.8 percent and 168.6 percent, respectively, year on year. Transactions as inflows totaled P1.22 billion in 2020, up 63.8 percent from 2019. According to BSP statistics, transactions as outflows were P1.19 billion, a 60.7 percent increase over 2019.

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