The National Payment Systems Act
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The National Payment Systems Act
Republic Act No. 11127
October 30, 2018
Case Overview and Summary
Title: The National Payment Systems ActDeclaration of Policy and Objectives (Sections 2-3):
- Recognizes payment systems as crucial parts of the financial infrastructure.
- Aims to promote safe, secured, efficient, and reliable operation of payment systems to control systemic risk and support economic growth.
Definition of Terms (Section 4):
- Defines key terms like Bangko Sentral, clearing, designated payment system, end-user, fund, issuer, manager, monetary board, netting, operator, participant, payment instrument, payment order, payment system, payment system management body, service provider, settlement, and systemic risk.
Authority and Powers of the Bangko Sentral (Sections 5-8):
- Bangko Sentral oversees and regulates payment systems in the Philippines.
- Can designate payment systems posing systemic risk or necessary to protect public interest. (Section 6a)
- Can require operators of designated payment systems to secure prior authority. (Section 6b)
- Can accredit payment system management bodies for self-regulation. (Section 6c)
- Can issue rules and regulations governing various aspects of payment systems. (Section 6d)
- Can issue directives and orders to participants to ensure safety, efficiency, and reliability. (Section 6e)
- Can require reports from participants for regulatory purposes. (Section 6f)
- Can collect annual fees from participants to cover supervisory expenses. (Section 6g)
- Can own and operate payment systems as deemed necessary. (Section 8)
Coordination with Other Agencies and Foreign Regulators (Section 9):
- Bangko Sentral coordinates with other regulators and government agencies to avoid gaps, inefficiencies, duplications, and inconsistencies.
- Coordinates with SEC for securities trading, clearing, and settlement systems.
- Coordinates with overseers of payment systems in other countries for cross-border transactions.
Registration and Organization of Payment System Operators (Sections 10-13):
- Operators must register with Bangko Sentral within 6 months of the law's effectivity. (Section 10)
- Operators of designated payment systems must incorporate as stock corporations and meet minimum requirements set by the Monetary Board. (Section 11)
- SEC cannot register operators without a certificate of authority from the Monetary Board. (Section 12)
- Acquisition of more than 10% voting shares in an operator requires prior Monetary Board approval. (Section 13)
Responsibilities and Finality of Settlement (Sections 14-15):
- Operators are primarily responsible for maintaining safe, efficient, and reliable payment systems. (Section 14)
- Settlement effected per agreed procedures is final and irrevocable, except for new monetary obligations if funds were not legally due. (Section 15)
Insolvency Notification and Designation of Manager (Sections 16-17):
- Participants must notify operators, and operators must notify Bangko Sentral, upon insolvency or bankruptcy. (Section 16)
- Bangko Sentral can designate a manager to manage operations of an operator under certain circumstances to avert disruptions. (Section 17)
Netting (Section 18):
- Operators can effect netting of payment orders received before insolvency notice as per agreed procedures, which shall be recognized in insolvency proceedings.
Administrative Sanctions and Penalties (Sections 19-20):
- Monetary Board can impose fines up to ₱1,000,000 per transactional violation or ₱100,000 per day for continuing violations, plus additional fines for profit gained or loss avoided. (Section 19a)
- Monetary Board can suspend, disqualify, or remove directors or officers of operators for specified violations. (Section 19b)
- Bangko Sentral can issue cease and desist orders. (Section 19c)
- Monetary Board can revoke an operator's certificate of authority for specified violations. (Section 19d)
- Monetary Board can cancel an operator's registration if it facilitates fraud or illegal transactions. (Section 19e)
- Willful violations are punishable by fines from ₱200,000 to ₱2,000,000 or imprisonment from 2 to 10 years, or both. (Section 20)
Other Provisions:
- Bangko Sentral to issue implementing rules and regulations within 60 days. (Section 21)
- Separability clause for unconstitutional provisions. (Section 22)
- Repeals inconsistent laws, decrees, orders, rules, and regulations. (Section 23)
- Existing payment systems given sufficient time to comply. (Section 24)
- Effectivity 15 days after publication in the Official Gazette or newspapers. (Section 25)
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payment systems
Bangko Sentral ng Pilipinas
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The National Payment Systems Act
Republic Act No. 11127
•October 30, 2018
REPUBLIC ACT NO. 11127
AN ACT PROVIDING FOR THE REGULATION AND SUPERVISION OF PAYMENT SYSTEMS
SECTION 1. Title. — The short title of this Act shall be "The National Payment Systems Act."
SECTION 2. Declaration of Policy. — The State recognizes that payment systems are crucial parts of the financial infrastructure of the country and it is essential that they function safely and efficiently for the stability and effectiveness of the monetary and financial system.
SECTION 3. Objectives. — The State shall promote, through the Bangko Sentral, the safe, secured, efficient and reliable operation of payment systems in order to control systemic risk and provide an environment conducive to the sustainable growth of the economy.
SECTION 4. Definition of Terms. — For the purpose of this Act, the following terms shall refer to:
(a) Bangko Sentral — the Bangko Sentral ng Pilipinas established under Republic Act No. 7653;
(b) Clearing — the process of transmitting, reconciling, and in some cases, confirming payment orders prior to settlement, and the establishment of final payment obligations for settlement;...
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