The Bangko Sentral ng Pilipinas (BSP) and the Cooperative Development Authority (CDA) have released a proposed joint circular that will set guidelines for cooperatives planning to operate as electronic money issuer-non-bank financial institutions (EMI-NBFIs) or operators of payment systems (OPS).

The document is titled: “Guidelines for Cooperatives Engaged or Intending to Engage in Activities of an Electronic Money Issuer-Non-Bank Financial Institution (EMI-NBFI) or of an Operator of Payment System (OPS).”

The BSP is the designated regulator of banks and other deposit-taking financial institutions, while the CDA is the regulator for cooperatives.

The NATCCO Network has obtained the draft of the proposed joint memorandum and will submit its opinions and comments to the two regulators before the November 15 deadline.

NATCCO offers the KAYA Payment Platform to cooperatives and is applying for a license from the BSP to be an “EMI-NBFI”.  A roadblock initially met the NATCCO application as only BSP-regulated entities were mentioned in its 2021 guidelines.  

Cooperatives, which are regulated by the CDA, were not mentioned.

So on 18 October 2023, the two regulators began to collaborate in drafting the Joint Memorandum for the supervision of cooperatives engaged in electronic money and operators of payment systems – particularly digital transactions.

According the JMC, “The implementation of the MOA is expected to result to adoption of a comprehensive regulatory framework, particularly on “Covered Cooperatives”, which will promote inclusive digital payments ecosystem, broader access to digital payments services, and contribute the development of the Philippine economy.”

The BSP has, since 2014, pushed for “financial inclusion” – for more Filipinos to have access to financial services from formal or registered financial institutions as a means to boost the economy and improve livelihood.

In the introduction, the Joint Memorandum Circular stated: “Cooperatives (are) important catalysts of growth and development in the community where they operate.  Leveraging on the economic and social components of cooperatives and their substantial presence in municipalities/cities in the Philippines, cooperatives can effectively contribute to payments digitalization and financial inclusion.”

The JMC sets the guidelines and the minimum regulatory requirements for Covered Cooperatives to harmonize existing laws on payments with applicable laws on cooperatives, enable compliance of Covered Cooperatives thereto, and provide for the specific roles and responsibilities of BSP and CDA.  The JMC likewise delineates the respective authorities of BSP and CDA with respect to the activities that they respectively supervise and establishes formal lines of communication to facilitate cooperative oversight on Covered Cooperatives. 

“Covered Cooperatives" shall follow the more stringent requirements between the provisions of applicable BSP issuances and those prescribed by the CDA. For purposes of determining compliance of Covered Cooperatives with this rule, each Authority shall have access to relevant information and documents that are under the custody or control of the other.  

The BSP is the government agency designated to implement the National Retail Payment Systems Act.  

The NATCCO Network is currently applying with the BSP for a license to be an Operator of Payment Systems (OPS).

The task will not be easy as regulations of the BSP are very stringent. 

NATCCO must comply with regulations by both the BSP and the CDA: the amended BSP Charter, National Payment Systems Act, CDA Charter, BSP Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), BSP Manual of Regulations for Payment Systems (MORPS) and applicable CDA issuances. 

NATCCO’s Payment Services Group Head, Evangeline C. Lopez, is confident that NATCCO will be able to comply with all the BSP and CDA requirements.