Apple Pay, Google Pay Plan to Enter Philippines Market

Apple Pay and Google Pay are currently exploring offering their services to the Philippine market but will have to first secure registration with the central bank as operators of payment systems (OPS), a top official of the Central Bank of Philippines said.

Bangko Sentral ng Pilipinas (BSP) deputy governor Mamerto Tangonan, the central bank has already had meetings with representatives of the service providers which are yet to be available in the Philippines, according to news agency GMA Network.

“They are exploring, and then we had a discussion on their activities and then it was clear to us that they are, when you touch the payment system, you are an operator of payment systems,” he told reporters.

“You perform such things so because of that, we deem them as operator of payment systems. Therefore, they need to register and that is our guidance to them, he added.

The BSP defines an operator as any person — both natural and juridical persons and all types of business organisations — who provides clearing or settlement services in a payment system, or defines, prescribes, designs, controls, or maintains the operational framework for the system.

Entities that are identified to perform OPS activities are required to register with the BSP, in line with the National Payments Systems Act (NPSA) of The Philippines.

Tangonan said that to his knowledge, the two firms have yet to formally apply for registration with the BSP, a process which could take a month before the services can be made available to the public.

“From their responses to us, the way they explain, it is clear to us that they touch the payment system. They perform something, so they are operators,” Tangonan said.

Both Apple Pay and Google Pay allow users to make financial transactions through near-field communication (NFC) devices, enabling the users to tap their smartphones or watches to make payments with their linked debit or credit cards and e-money accounts.

“We don’t license them. We just require registration. They can provide the service once they are registered,” Tangonan said.

With the OPS registration being the only requirement, Tangonan was asked why the service providers have yet to file applications. “You would have to ask them. You never know, maybe they are already doing it,” he said.

Retail Payment Transactions Grow

In its report entitled “2023 Status of Digital Payments in The Philippines,” the BSP said that from a mere 10% in 2018, the volume of retail payment transactions has grown exponentially to 52.8% in 2023, surpassing the target set forth in the BSP Digital Payments Transformation Roadmap 2022-2023.

Out of 5 billion monthly transactions more than 2.6 billion transactions were successfully converted into digital form representing a substantial 28.1% increase from the previous year.

The surge in digital payments over the past six years were primarily driven by the widespread adoption of online merchant transactions, person-to-person remittances, and supplier payments made by businesses.

“The positive shift has been particularly noticeable especially in the merchant payment use-case. The pandemic has indeed acted as a catalyst in this area, pushing both businesses and consumers to adopt to digital payments, while also reducing the reliance on traditional cash-based methods. This trend continues up to the new economy era, given the convenience and efficiency of digital payments,” the report said.