Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla said on Wednesday, Feb. 8, that they have increased to P200 million from P100 million the required minimum capital for an electronic money issuer (EMI) with transactions of P25 billion or more, regardless if owned by a bank or a non-bank financial institution (NBFI).

Medalla said the revised guidelines under Circular No. 1166 which he signed on Feb. 7, is reaffirming the BSP’s vow to “uphold the welfare of Filipinos by promoting a safe, secure, and inclusive financial system.”

“The amendments are geared towards equipping EMIs in attending to the evolving needs and behaviors of consumers and in responding to the existing and emerging risks in the financial sector, such as cybersecurity and money laundering,” he said.

The BSP considers e-money as electronically-stored cash in an instrument or device such as cash cards, prepaid cards, stored value cards, or any digital wallet accessible via mobile phones or other access device, and other similar products within the scope of electronic payments. All e-money is a non-interest-bearing and non-deposit transaction account and pre-funded by customers.

The amended circular updated the previous circular by expanding the definition of EMIs, and taking into consideration recent advances in digital technologies. The new rules are also deemed more “responsive and effective” in management of attendant risks of e-money transactions.

The BSP is giving all banks and NBFIs one year to comply with the revised guidelines.

Meantime, the circular adopts risk management systems which are commensurate to the EMIs size, risk profile, complexity of operations, and systemic importance, and attuned to the “evolving needs and behaviour of consumers” as well as safeguards and controls to ensure that risks remain within manageable levels, said the BSP.

To further protect e-money account holders, the new guidelines imposed higher liquidity and capital requirements for EMIs. For example, EMIs with monthly outstanding e-money balance of at least P100 million should have liquid assets in trust accounts equivalent to at least 50 percent of their outstanding e-money balance.

They are also required to cover the remaining balance with placements in bank deposits, government securities, or other liquid assets acceptable to the BSP, while EMIs with e-money balance below P100 million may comply with the liquidity requirements by holding eligible liquid assets.

As for EMIs with a 12-month large-scale operations of P25 billion or more, they are required to maintain a minimum capital of P200 million. The minimum capital requirement for small-scale EMIs is P100 million.

The BSP also lifted its previous monthly aggregate load limit and is allowing EMIs to set pre-defined limit and threshold per client category based on the results of their institutional risk assessment and customer due diligence process.

Under the new circular, there are two EMI classification: EMI-Banks and EMI-NBFIs. EMI-Others are now EMI-NBFIs.

“The guidelines likewise expanded the definition of e-money to include those that may be transferred to other accounts as compared with earlier regulations limiting it to only those withdrawable in cash or cash equivalent. In addition, the new rules broadened the acceptability of e-money to include merchants and issuers using the same mobile application,” said the BSP.

Since Dec. 16, 2021, the central bank has closed the EMI application window and it will stay close for two years. The ban was imposed for both banks and NBFIs.

As of Feb. 3, the BSP is supervising 70 registered and licensed EMI-Banks and EMI-NBFIs including GCash, PayMaya and GrabPay.

Of the 70, 29 are EMI-Banks and 41 are EMI-NBFIs.