One Payroll Account Act

Stuate • of tige specretery TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 25 DEC 17 P6:32 SENATE RECEIVED BY: 1646 S. No. - Introduced by SENATOR MARK A. VILLAR AN ACT PROVIDING FOR THE OPENING AND PORTABILITY OF TRANSACTION ACCOUNTS FOR PAYROLL PURPOSES EXPLANATORY NOTE Financial inclusion refers to the state wherein there is effective access to a wide range of financial services for all, especially the vulnerable sectors.! According to the Bangko Sentral ng Pilipinas (BSP), account ownership with a formal institution such as a bank or e-money issuer (EMI) is a basic indicator of this condition. In the Philippines, employees, particularly new hires, secure numerous pre- employment requirements and are typically required to open a payroll account with their company's partner bank. However, these payroll accounts are usually closed once employment ends, creating unnecessary administrative burdens on employees who must repeat the process for every new employment. This practice also discourages long-term access to the financial system, especially by employees in lower income brackets, and overlooks the widespread adoption of digital financial technologies, particularly e-money accounts-the most-owned type of account among Filipinos.? In a developing economy where only 56% of adult Filipinos own a formal account and where the perception is that large deposits and complex paperwork are ' Financial Inclusion Steering Committee, 2022 ANNUAL REPORT NATIONAL STRATEGY FOR FINANCIAL INCLUSION p. 4. 2 BSP, 2021 FINANCIAL INcLUSION SURVEY REPORT (hereinafter "2021 FISR") p. 13. 3 2021 FISR p. 1.

required to open and maintain a bank account, a framework that simplifies and sustains employee participation in the financial system must be established. Thus, this bill mandates employers and financial institutions to facilitate the opening of transaction accounts— either bank or EMI-for payroll purposes, which do not need to be closed in case of departure from the employer. Employees will also be given the right to designate an existing transaction account as their payroll account, regardless of employer, and without additional charges. Finally, the government, through the Department of Labor and Employment and the BSP shall be tasked with promoting the safe and responsible use of transaction accounts by employees. Through these measures, the goal of improving the Filipino workers' financial well-being and meaningful participation in the economy can be ensured. In view of the foregoing, the immediate passage of this bill is earnestly sought. MARK A. VILLAR PVC 4 2021 FISR p. 25.

Bewate TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) First Regular Session 25 BEC 97 P6 :32 SENATE RECEIVED BY: S. No. 1646 Introduced by Senator MARK A. VILLAR AN ACT PROVIDING FOR THE OPENING AND PORTABILITY OF TRANSACTION ACCOUNTS FOR PAYROLL PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "One Payroll Account

2 Act."

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State:

(a) To encourage the timely payment of wages and other monetary benefits 5 through interoperable financial services; (b) To afford employees access to formal financial services for the promotion of their welfare; (c) To reduce the costs and risks of physical cash disbursements; and (d) To utilize digital transactions in sustaining economic growth. Towards this end, the State shall provide for mechanisms that empower employees to access financial products and services that are suited to their needs.

Sec. 3. Definition of Terms. - For purposes of this Act, the terms are defined

as follows: (a) Bank account refers to all types of accounts under the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); (b) Electronic money or e-money refers to monetary value stored in a transaction account that is not a deposit and non-interest-bearing that was issued, created, or accepted by a bank and is: (i) electronically stored in an instrument or

1 device; (ii) denominated in or pegged to Philippine Peso; (iii) pre-funded by customers to enable transactions through the use of a transaction account; (iv) accepted as a 3 means of payment by the issuer for its customers or by other persons or entities, 4 including merchants or sellers; (v) issued against receipt of funds of an amount equal 5 to the monetary value issued; and (vi) withdrawable in cash or cash equivalent or 6 transferrable to other accounts or instruments that are withdrawable in cash. (c) Electronic instruments or devices refers to cash cards, prepaid cards, stored 8 value cards or any digital wallet accessible via mobile phones or other access device, and other similar products within the scope of electronic payments and financial 10 services as defined under the pertinent rules and regulations of the BSP; (d) E-money issuer (EMI) refers to a bank, non-banking financial institution, or non-bank institution registered with the BSP as Money Transfer Agents; (e) Financial service access point refers to physical touch points where clients can transact their bank or e-money account, such as but not limited to deposit, withdrawal, bills payment, and fund transfer; (f) Transaction account refers to a bank or e-money account held with a BSP- regulated financial service provider that can be used to store, send, and receive funds; and (g) Payroll account refers to a transaction account specified by an employee wherein the employer must deposit all salaries, wages, and other compensation.

Sec. 4. Opening of Transaction Accounts. - To promote a safe and reliable

mode of receiving wages and other monetary benefits, employers shall facilitate the opening of a transaction account in a bank or EMI for employees with no existing transaction account; Provided, That preference shall be given to the bank or EMI wherein the employer maintains an account. For purposes of opening transaction accounts, banks or EMIs shall simplify their know-your-customer requirements, wherein identifying and verifying the identity of an employee may be based on any document or written information sufficient to establish identity. Employees who resign or whose employment is involuntarily terminated shall not be required to close their transaction accounts with their employer's partner bank or EMI.

Sec. 5. Portability of Payroll Accounts. - Employees with existing transaction

2 accounts shall have the option to designate the same as their payroll account; 3 Provided, That an employee shall designate only one (1) payroll account per employer; 4 Provided, further, That the availment of the option shall not, in any case, result in 5 expenses or fees charged against the employee or any form of diminution of wages and other monetary benefits.

Sec. 6. Initiatives on Transaction Accounts. - The Department of Labor and

8 Employment (DOLE), in coordination with the BSP and private stakeholders, shall: (a) Promote and educate employees on the benefits and risks of using 10 transaction accounts for payroll purposes; (b) Require banks and EMIs to provide employees with information on the features of their transaction accounts and an updated list of nearest financial service access points; and (c) Assist employees with no existing transaction accounts in applying for one, taking into consideration the transactional needs of the employee concerned.

Sec. 7. Implementing Rules and Regulations. - Within ninety (90) days after

the effectivity of this Act, the DOLE and the BSP shall issue the rules and regulations 18 for the effective implementation of this Act.

Sec. 8. Separability Clause. - If any provision of this Act is held unconstitutional

or invalid, such holding shall not affect other provisions not affected thereby.

Sec. 9. Repealing Clause. - All laws, decrees, executive orders, issuances,

rules, and regulations that are inconsistent with the provisions of this Act are hereby repealed or amended accordingly.

Sec. 10. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in at least two (2) newspapers of general circulation. Approved,