Philippines expands instant payments with new fraud controls

The Philippines expanded its digital payment network while introducing stronger controls against fraud. The Bangko Sentral ng Pilipinas, the country’s central bank, set rules covering InstaPay, PESONet and QR Ph.

InstaPay processes low-value transfers almost immediately. PESONet handles electronic fund transfers that are generally settled in batches. QR Ph provides a common QR-code payment standard for participating banks and electronic-money providers.

The central bank promoted wider use of the systems through its Digital Payments Transformation Roadmap. The program set a target for digital payments to account for half of retail payment volume and for 70% of Filipino adults to hold a transaction account by 2023.

Digital payments accounted for 52.8% of retail payment volume in 2023, up from 20.1% in 2020, according to the central bank.

The increase in digital transactions exposed users to scams, account takeovers and unauthorized transfers. In response, the central bank required banks and nonbank financial institutions to improve fraud monitoring, customer authentication, transaction alerts and procedures for disputed electronic payments.

Financial institutions were directed to share information about suspected fraud and strengthen controls on accounts used to transfer funds linked to illegal activity. Banks and electronic-money issuers have introduced transaction limits, waiting periods for changes to customer details, device registration, one-time passwords, biometric checks and warnings before transfers are completed. The measures differ by provider and service.

The central bank has worked with financial institutions and law-enforcement agencies to report and trace suspicious transactions. Customers are advised to contact their bank or electronic-wallet provider immediately after an unauthorized payment and report suspected scams to the relevant authorities.

InstaPay and PESONet connect participating financial institutions. QR Ph is designed to let customers use one national QR standard across different banks and electronic-money providers.

The systems allow households and businesses to send money without visiting a branch, receive government or commercial payments electronically and settle purchases through mobile applications. The central bank’s rules require financial institutions to manage technology and fraud risks, maintain system availability and provide channels for complaints and reimbursement reviews.

The central bank continues to add participants and services to the digital payment network. It has promoted interoperable payments, allowing users of different banks and electronic wallets to transfer funds or make QR payments without using the same provider.