The Bangko Sentral ng Pilipinas (BSP)-controlled Philippine Payments and Settlement Systems (PhilPaSS) reported that it has reached total transactions of P768 billion as of end-July.

BSP Deputy Governor Armando L. Suratos said PhilPaSS, where fund transfers are processed and settled on a real time basis without netting debits against credit, is continually increasing participants by striking agreements with financial institutions.

“As a result, the volume and value of PhilPass has been improving as well as from P100 billion in 2002 (first launched) to P768 billion,” Suratos said. All 35 commercial banks and three specialized government banks including Land Bank of the Philippines have settlements processed through the system. Participants also include 38 thrift/savings banks, 10 rural banks and 10 non-financial quasi banking institutions.

BSP Thursday signed a memorandum of agreement with Philippine Finance Association to allow its members, which include finance companies engaged in credit cards, automotive sales and leasing, to secure processing of interbank fund transfers with PhilPaSS.

“(They) will be able to transact business on government securities and foreign exchange trades, participate in the BSP’s open market operations online and efficiently manage their funds electronically,” Suratos said.

Last April, the BSP reduced PhilPaSS fees to P5 for fund transfers or remittances and have asked banks to standardize transaction fees. There was an agreement with the Bankers Association of the Philippines and the Association of Bank Remittance Officers (ABROI) for PhilPaSS access for remittances. ABROI members include Banco de Oro Unibank, Metropolitan Bank & Trust Co., Bank of the Philippine Islands, Philippine National Bank, Land Bank of the Philippines and Rizal Commercial Banking Corp. and China Banking Corp.

The back end processing fees of banks for remittances cost P125 to P250 per transaction since banks still use third parties to remit the cash to the beneficiaries for same day deliveries. But by using the PhilPaSS system, the remittances can be received within the same day at lower costs.

The central bank launched PhilPaSS in 2002 when it averaged only 24 transactions a day at a volume of P10 billion. At the end of 2008, PhilPaSS averaged 2,400 transactions per day worth over P900 billion.

In July last year, to encourage more banks to participate in PhilPaSS, the BSP waived some P3.5 million in fees to banks and non-bank financial institutions. Abolished were annual license fees of P20,000 for the use of PhilPaSS and P30,000 for third party system providers.

BSP wants to expand the usability of PhilPaSS as a payments facility that is fast, safe and efficient to benefit all banking institutions. BSP said the participation of thrift and rural banks will “enable them to electronically manage their demand deposit accounts, including interbank lending and borrowing, sale and purchase of government securities, peso-leg settlement of foreign exchange sale and check clearing.”

In the last five years, PhilPaSS has been interconnected with the check and peso clearing results of the Philippine Clearing House Corp., the delivery vs payment of government securities transactions of the Bureau of the Treasury, the ATM transactions of the Megalink member banks, and the payment vs payment transactions of the Philippine Dealing Exchange.