Electronic Payments for Merchants, Enteprises, and Nationwide Transactions (E-payment Act)

Sentate Oilice of the & cretary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 26 FEB 10 P1:58 First Regular Session RECEIVED BY: SENATE Senate Bill No. 1821 Introduced by Senator JOEL VILLANUEVA AN ACT PROMOTING THE ADOPTION OF DIGITAL PAYMENTS FOR FINANCIAL TRANSACTIONS OF THE GOVERNMENT AND ALL MERCHANTS EXPLANATORY NOTE The rapid digitalization of financial transactions in recent years has fundamentally transformed how governments, businesses, and individuals exchange value. The COVID-19 pandemic, in particular, accelerated the shift from cash-based transactions to digital payments, underscoring their importance in ensuring continuity of economic activity, efficient public service delivery, and financial inclusion.l Data from the Bangko Sentral ng Pilipinas (BSP) demonstrate the growing role of digital payments in the Philippine economy. Digital retail payments now account for a substantial and increasing share of total transaction volume, driven by the expansion of electronic money, online banking, and mobile payment platforms. This momentum reflects a clear shift in consumer behavior, as well as the increasing readiness of both At the same time, government policy has increasingly recognized the value of digital payments in promoting efficiency, transparency, and accountability. Existing laws and issuances, including the Ease of Doing Business and Efficient Government Service Delivery Act and Executive Order No. 170 (s. 2022), have directed government Philippine Journal of Science. Digital Payment Adoption during the COVID-19 Pandemic in the Philippines https://www.researchgate.net/publication/362780624_Digital_Payment_Adoption_during_the_COV ID-19_Pandemic_in_the_Philippines (last Accessed on 9 February 2026). 2 BSP. From Surge to Stability: Digital Payments Driving a Steady Transition (2024 Status of Digital Payments in the Philippines. https://www.bsp.gov.ph/PaymentAndSettlement/2024_Report_on_E- payments_Measurement.pdf (last Accessed on 9 February 2026).

agencies to utilize safe and efficient digital methods for collections and disbursements. However, these measures remain fragmented and unevenly implemented, underscoring the need for a comprehensive and institutionalized legal framework. This proposed measure seeks to address these gaps by consolidating and harmonizing existing legislative proposals on digital payments into a single, coherent policy framework. It promotes the adoption of digital payments across government and private sector transactions while ensuring that such adoption is inclusive, interoperable, and aligned with existing regulatory standards. Crucially, this bill recognizes that the transition to digital payments must be accompanied by strong safeguards. While digital payments offer speed and convenience, they also raise legitimate concerns relating to data privacy, cybersecurity, consumer protection, and the proper handling of public funds. This measure therefore emphasizes compliance with BSP regulations, data privacy laws, and information security standards, while preserving the constitutional authority of the Commission on Audit over all government funds, regardless of the payment channel used. The bill further seeks to balance innovation with inclusivity. It encourages the adoption of digital payment capabilities by merchants, particularly micro and small enterprises, through incentives, capacity-building, and support mechanisms-rather than imposing rigid or exclusionary requirements. In doing so, it ensures that digitalization does not become a barrier to livelihood, especially for participants in the informal sector. By promoting interoperability and a technology-neutral environment, this measure fosters healthy competition among payment service providers while preventing market fragmentation. It also supports the BSP's initiatives toward interoperable payment systems and open finance, subject to strict data protection and consumer consent requirements. Ultimately, this proposed Act envisions a digital payments ecosystem that works for everyone: one that enables the government to deliver services more efficiently, allows businesses to operate with lower costs and greater transparency, and empowers consumers through accessible, secure, and trustworthy payment options. In view of the foregoing, the immediate passage of this measure is earnestly sought. брем VILLANUEVA A

Schate Bifier of the Secretary TWENTIETH CONGRESS OF THE ) 26 FEB 10 P1:58 REPUBLIC OF THE PHILIPPINES First Regular Session RECEIVED BY: SENATE Senate Bill No. 1821 Introduced by Senator JOEL VILLANUEVA AN ACT PROMOTING THE ADOPTION OF DIGITAL PAYMENTS FOR FINANCIAL TRANSACTIONS OF THE GOVERNMENT AND ALL MERCHANTS 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 "Electronic

Payments for Merchants, Enterprises, and Nationwide Transactions (E- PAYMENT Act)."

SEC. 2. Declaration of Policy. - It is hereby declared the policy of the

State to recognize the vital role of information and communications technology, particularly financial technology, in nation-building, financial inclusion, and economic development. To this end, the State shall promote the safe, secure, affordable, and efficient use of digital payments in government and private sector transactions; institutionalize digital payments in government collections and disbursements to enhance transparency, accountability, and efficiency; encourage the inclusive and non-burdensome adoption of digital payment capabilities by merchants; ensure consumer protection, data privacy, and cybersecurity in accordance with law and Bangko Sentral ng Pilipinas (BSP) regulations; and

foster a technology-neutral, competitive, and interoperable digital payments ecosystem that promotes public trust.

SEC. 3. Objectives. - This Act aims to increase the adoption and use of

digital payments in government and private sector transactions; reduce transaction costs, inefficiencies, and leakage in the handling of public funds; promote interoperability and fair competition among digital payment platforms; protect consumers, merchants, and government entities from fraud, abuse, and misuse of personal data; and support the transition toward a cash-lite, inclusive, and resilient digital economy.

SEC. 4. Definition of Terms. - As used in this Act:

a) Basic Deposit Account (BDA) refers to the deposit product offered by banks as defined under the BSP Manual of Regulations for Banks and its implementing guidelines; b) Digital Paymentrefers to a monetary payment transaction between two (2) parties using a digital payment instrument, in which both the payor and the payee use an electronic channel; C) Digital Collection refers to a mode of payment wherein businesses and individuals make payments to the government, including but not limited to taxes, fees, and tolls, using a digital device such as a mobile phone, point of sale, or computer. Payments can be made with bank transfers, electronic money transfers, and payment cards including credit, debit, prepaid, or stored-value cards, among others; d) Digital Disbursement refers to a mode of payment whereby disbursement of money or equivalent electronic representations of legal tender, for purposes of paying government expenditures, is made by crediting the target recipient's transaction account through advice to debit or electronic fund transfer facilitated by any government agency or instrumentality through their respective servicing bank; e) Electronic Fund Transfer refers to a transfer of funds between two (2) transaction accounts in the same or different BSP-supervised financial institutions, which are initiated and received using electronic devices and channels to transmit payment instructions;

f) Electronic Money (e-money) refers to electronically stored monetary value issued in accordance with the BSP Manual of Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions; g) Financial inclusion refers to the state wherein there is effective access to a wide range of financial products and services for all Filipinos; h) Government Servicing Payment Service Provider (GSPSP) refers to bank and non-bank PSPs authorized to accept government funds and perform payment services on behalf of government entities. This includes authorized government depository banks (AGDBs) as defined by the Department of Finance (DOF) regulations; i) Interoperability refers to the ability of different digital payment systems and platforms to connect and transact seamlessly with one another. Merchant refers to any person or entity, including micro and small enterprises, engaged in buying and selling services or merchandise, purchasing of services, skills, or expertise, and leasing of goods and services; k) Micro-payment Transactions refers to low-value payments, including but not limited to payments to sari-sari store owners, wet market vendors, as well as tricycle and jeepney drivers, the actual thresholds of which shall be determined by the BSP, pursuant to the objectives of this Act; 1) Payment Service Provider (PSP) refers to an entity, bank or non- bank, including electronic money issuers, that provides digital payment services to end-users such as consumers, merchants, billers, and government entities, subject to BSP regulation; m) Payment System refers to the set of payment instruments, processes, procedures and participants that ensure the circulation of money or movement of funds, which comply with the requirements set forth under Republic Act No. 11127 or the National Payment System Act; and Transaction Account refers to an account, such as but not limited to a BDA or a e-money account held with a BSP-supervised institution that may be used to store, send, and receive funds.

SEC. 5. Adoption of Digital Payments for Government

Disbursements. - All government entities, including but not limited to national government agencies (NGAs), government-owned or -controlled corporations (GOCCs), foreign-based Philippine government agencies, local government units (LGUs), State Universities and Colleges (SUCs), and Local Universities and Colleges (LUCs) are hereby mandated to utilize safe, secure, 7 and efficient digital payment systems for the disbursement of government 8 funds, including but not limited to salaries, wages, allowances, benefits, subsidies, and financial assistance, subject to existing accounting and auditing rules. Government entities may disburse funds directly to recipients' transaction accounts held with BSP-supervised financial institutions. For this purpose, said government entities may use the automatic debit arrangement, interoperable electronic fund transfer, or any other appropriate facility of its GSPSPs. Accountable officers of the government entities shall observe due diligence in ensuring the accuracy of the recipient's or beneficiary's identity. All such transactions shall remain transparent and subject to post-audit by the Commission on Audit (COA). Government entities shall be responsible for preparing the payment instruction with the necessary details, including the recipient's or beneficiary's name, transaction account details, and amount, among others, only after proper authorization in accordance with established accounting and auditing rules and regulations. In case of successful digital disbursement, there shall be a recovery mechanism that will ensure the continuity of delivery of payment services: Provided, That in cases of calamities or other emergencies, where payments through digital means may be affected, non-digital pay-out channels may be explored.

SEC. 6. Adoption of Digital Payments for Government Collections.

- All government entities, including but not limited to NGAs, foreign-based Philippine government agencies, GOCCs, LGUs, SUCs, and LUCs, shall offer

1 digital payment options, in addition to cash, for the collection of taxes, fees, tolls, imposts, and other revenues. Government entities shall engage only secure, interoperable, and BSP- compliant digital payment solutions, and shall not be limited to government financial institutions in selecting their PSPs.

SEC. 7. Interoperability and Open Finance. - The BSP shall

accelerate the adoption of interoperable digital payment systems, including the 8 National Quick Response (QR) Code Standard, to ensure seamless transactions across platforms. The BSP, in coordination with relevant government agencies, shall likewise promote the Open Finance Framework, subject to customer consent, data privacy, and information security safeguards.

SEC. 8. Digital Payment Capability of Merchants. - To accelerate

the adoption of digital payments, LGUs shall, by ordinance, encourage the adoption of digital payment capabilities by merchants within their jurisdictions through monetary and non-monetary incentives, capacity-building, and other support mechanisms, including the establishment or outsourcing of arrangements or mechanisms that enable merchants to receive payments from clients and make payments to creditors and suppliers using digital channels, with particular consideration for micro and small merchants. LGUs shall ensure that merchants have access to appropriate digital payment solutions and the capacity to effectively use the same, including assistance for small and micro- merchants. The BSP, Department of Trade and Industry (DTI), Department of the Interior and Local Government (DILG), and Department of Information and Communications Technology (DICT) shall provide capacity building for the NGAs, GOCCs, LGUs, SUCs, LUCs, and merchants on the use of digital payments. No requirement imposed pursuant to this Act shall unreasonably burden or exclude informal sector participants from lawful economic activity.

SEC. 9. Consumer Protection, Data Privacy, and Cybersecurity. -

All data information and communications technology systems and networks

1 used for digital payments pursuant to the objectives of this Act shall be secured and protected at all times. The DICT and the National Privacy Commission (NPC) shall, in consultation with the BSP, define and prescribe the minimum information security and data protection standards for compliance by PSPs covered by this 6 Act that are not under the oversight and regulatory authority of the BSP. Further, all digital payment systems covered by this Act shall: 8 a) Comply with the Data Privacy Act of 2012, BSP regulations, and NPC standards; b) Integrate security and privacy by design and by default; c) Establish accessible dispute resolution and redress mechanisms; and d) Implement appropriate safeguards against fraud, cybercrime, and unauthorized transactions.

SEC. 10. Incentives and Support Measures. - To optimize the

benefits of digital payments, scale up financial inclusion, and promote sustainability, all government entities shall prioritize the use of safe, secure, reliable, and efficient digital payment in their financial transactions. Government entities may adopt incentive frameworks to encourage digital payments, including reduced transaction fees for micro-payments, administrative incentives, and financial and digital literacy programs. Further, to enable the general public to adopt digital payments, micro- payment transactions shall be subject to graduated pricing or be rendered free 23 of any service charge as determined by the BSP in consultation with the merchants and the payment services industry, as may be represented by the BSP-accredited payment system management body. The DICT shall, consistent with its mandate and subject to available resources, support initiatives that enhance connectivity necessary for the effective implementation of this Act.

SEC. 11. Transitory Provision. - Government entities shall ensure the

orderly and progressive transition of their respective collection and

disbursement procedures and policies to digital payments, in accordance with this Act and its implementing rules and regulations (IRR). Digital disbursement shall be implemented within six (6) months from the effectivity of the IRR, subject to reasonable exceptions based on operational constraints, as may be determined by the BSP in coordination with relevant agencies. Digital collections shall likewise be implemented subject to a tiered and phased transition framework, to be prescribed in the IRR, which shall provide 9 differentiated transition periods based on the readiness, capacity, and operational requirements of government entities: Provided, That the overall transition period shall not exceed three (3) years from the effectivity of the IRR.

SEC. 12. Prohibited Acts. - The following acts shall be unlawful under

this Act: a) Willful refusal or deliberate failure, without lawful justification, of a public officer or employee to implement digital payment policies, systems, or directives duly issued pursuant to this Act or its implementing rules and regulations, when such refusal or failure results in material prejudice to public service, public funds, or government operations; b) The knowing authorization, use, or maintenance of digital payment arrangements for government transactions that are intended to conceal, divert, delay, or misuse public funds, or to defeat transparency and accountability requirements; C) The intentional circumvention, suppression, or manipulation of audit trails, records, reports, or data relating to digital payment transactions involving public funds, for the purpose of avoiding post-audit, examination, or verification by the Commission on Audit or other lawful authorities; d) The knowing engagement, endorsement, or continued use of non- compliant, fraudulent, or unregistered digital payment platforms or arrangements for government transactions, despite the availability of compliant and interoperable alternatives; or

e) The willful misrepresentation or false certification of compliance with interoperability, security, transparency, or regulatory requirements prescribed under this Act or its implementing rules and regulations.

SEC. 13. Penalties and Sanctions. - Without prejudice to the penalties

and sanctions provided under Republic Act No. 11127, otherwise known as the "National Payment Systems Act," and other applicable laws, any person who willfully commits any of the prohibited acts enumerated in the preceding section, or willfully violates any provision this Act, its implementing rules and regulations, or lawful directives or orders duly issued by the BSP pursuant hereto, shall be punished by a fine of not less than Two Hundred Thousand Pesos (Php200,000.00) but not more than Two Million Pesos 12 (Php2,000,000.00), or by imprisonment of not less than three (3) years but not more than ten (10) years, or both, at the discretion of the court. When the offender is a public officer or employee, the penalty of perpetual 15 or temporary disqualification from public office, as may be appropriate, shall be 16 imposed in addition to criminal liability, without prejudice to administrative sanctions under existing laws. When the offender is a juridical entity, the responsible officers who authorized, participated in, or knowingly tolerated the commission of the prohibited act shall be held liable. The penalties provided under this Act shall be without prejudice to the application of penalties, sanctions, or liabilities under existing laws, including but not limited to laws on public accountability, anti-graft and corruption, data privacy, cybercrime, and financial regulation.

SEC. 14. Lead and Implementing Agencies. - The BSP shall serve as

the lead implementing agency of this Act, in coordination with the Department of Budget and Management (DBM), DOF, DICT, DTI, DILG, NPC, and the COA.

SEC. 15. Implementing Rules and Regulations. - Within one

hundred eighty (180) days from the effectivity of this Act, the BSP shall, in consultation with the concerned agencies, promulgate the necessary rules and regulations to effectively implement the provisions of this Act.

Unjustified or willful failure or refusal of the relevant government agencies to promulgate the IRR within the specified period shall subject the heads of these government agencies to administrative penalties under applicable civil service laws. Should the IRR contain provisions that are contrary to this Act, the heads of the government agencies responsible for such provision, when done in bad faith or with gross negligence, shall be held administratively liable.

SEC. 16. Interpretation. - Nothing in this Act shall be construed to

exempt any government funds in the possession of private entities from the constitutional authority and duty of the COA to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of, funds and property owned or held in trust by, or pertaining to, the 13 government. All digital payments involving government transactions under this 14 Act shall be subject to post-audit by the COA, in accordance with existing laws, 15 rules, and regulations. Accordingly, the COA may issue or update such rules and guidelines as may be necessary to implement its audit authority over transactions covered by this Act.

SEC. 17. Separability Clause. - If any portion or provision of this Act

19 is declared unconstitutional, the remainder hereof or any provisions not affected thereby shall remain in force and effect.

SEC. 18. Repealing Clause. - Any law, presidential decree or issuance,

executive order, letter of instruction, rule, or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

SEC. 19. Effectivity. - This Act shall take effect fifteen (15) days after

its complete publication in the Official Gazette or in a newspaper of general circulation. Approved,