TOP > Feature > What is InstaPay and PESONet Philippines?
October 24, 2019 Published

A government initiative with the BSP at the forefront, the National Retail Payment System (NRPS) promotes interoperability of products and services of financial institutions with one another.

October 24, 2019 – In the past, while acquiring Bitcoins through popular crypto apps like Coins.ph and BuyBitcoin.ph has been convenient because of multiple cash-in partners, the convenience stops there. If you want to convert your Bitcoin back to pesos and cash it out, you are faced with limited choices. Sure, there’s LBC, there’s the crypto-friendly UnionBank, but beyond the pawnshops and OTCs, choices are lesser.

The option to transfer money from crypto apps to a bank is very limited. The problem does not lie with the crypto app not being a partner of the bank, but (the ongoing consensus amongst the people I talked to is) because the bank simply refused to become a partner of the crypto app. This is not without justification. The Bangko Sentral ng Pilipinas, before it switched tunes in 2017, required its supervised institutions to be wary of anything related to cryptocurrency. Of course, that has changed now. With Circular 944, a crypto company can obtain a license so that they can legally convert crypto to fiat and vice versa. Still, from sources I will not name, it seemed the banks still simply do not want to touch crypto despite the legal status of these virtual currency exchanges. In one press release, BSP said, “exercise due diligence when dealing with virtual currency exchanges”. The Central Bank did not say “do not engage”, but rather exercise “due diligence”. There is a difference.

Instapay and PESONet?

This month, mobile wallet Coins.ph announces that its users can now instantly cash out to banks (and non-banks) that are members of InstaPay. PDAX allows cash out to banks (and non-banks) that are participants of Instapay and PESONet. While we will not discuss the topic in its entirety, let’s look at why being a member of InstaPay and PESONet is convenient to users of crypto apps and exchanges in the Philippines.

Read More: [Summary] Cash In and Cash Out Fees of Crypto Exchanges/Wallets in the Philippines

What is the National Retail Payment System?

A government initiative with the BSP at the forefront, the National Retail Payment System (NRPS) promotes the interoperability of products and services of financial institutions with one another. Simply put, it requires financial institutions – banks, non-banks, e-money issuers, all BSP-supervised institutions – to make sure their users can effortlessly do funds transfer from one entity to another without much complexity, no more waiting for 3 – 5 banking days. In the most basic examples, it ensures that:

  • I can transfer money from my BDO account to my UnionBank account;
  • I can transfer money from my Coins.ph account to my BDO account;
  • I can send money from my Gcash to my friend’s Paymaya account.

There are 2 Automated Clearing Houses (ACHs)* under  the NRPS:

PESONet

The Philippine EFT System and Operations Network (PESONet) is a batch electronic fund transfer (EFT) credit payment scheme. In this system, the fund transfers are processed in bulk and they are cleared in bank intervals. So if I transfer money to another person via PESONet, he will not receive it immediately, but at most – the sending and receiving is completed within hours or by end of the day because my transfer request is processed along with other requests in the network.

InstaPay

If PESONet transfers the money within the day, Instapay allows crediting of funds in real time up to Php 50,000 with a minimum transaction fee. Launched on April 23, 2018, Instapay is “designed for small value transfer of money or payments” like purchasing of goods, paying for tickets, online shopping, etc. Based on my experience, I transferred money from my UnionBank account number to my friend’s BPI account and my friend “almost” instantly received it.

NPRS intended that payment products be built on InstaPay so that merchants can accept electronic payments from both e-money and bank accounts without having the usual point-of-sale (POS) devices used for cards.

In Relation to Crypto Apps

Becoming part of InstaPay or PESONet is more of giving their users a method of electronic fund transfer among participating banks and non-banks. A BPI account holder can transfer to UnionBank seamlessly. A Gcash account can send money to a Paymaya account. These are things not possible when they were first launched, especially in the case of Gcash and Paymaya, owned by companies who are competing in other industries like telco. These are things also not possible before for Crypto apps, who, in the past, are shunned by banks.

Below this article is a list of participants for both PESONet and InstaPay. From that, we can infer that one requirement to be part of PESONet and/or InstaPay is to become a BSP-supervised institution. Well, companies that engage with the peso or electronic peso, whether a pawnshop or money changer or bank or e-wallet that stores electronic peso (that will be exchanged for other items**) are (or must be) a BSP-supervised entity. Crypto exchanges with Virtual Currency Exchange license are BSP-supervised entities. Of course, there are surely other (and more stringent requirements) to become a participant to InstaPay and PESONet. Not to mention the relationship between the exchange and the banks, becoming part of InstaPay and/or PesoPay will increase the ways as to which the users can cash out their money.

Of course, some will say that e-wallets, crypto apps, or even internet banking etc are meant for users who don’t have bank accounts or cannot transact with banks because of lack of identification or they cannot meet the bank’s minimum transaction amount. Still, the point of InstaPay and PESONet is to make it convenient to transfer money. If you can transfer directly to your bank account online, there is no need to go to the nearest pawnshop, remittance branch, etc to cash out. You just transfer it to your bank without leaving your house through mobile banking, or just plain online.

Now let’s be clear. What is being cashed out is pesos. Not Bitcoin. Not Ethereum. Etc.

List of PESONet Participants (as of September 30, 2019):

  1. Al-Amanah Islamic Invest. Bank
  2. Asia United Bank Corporation
  3. Australia and New Zealand Banking Group Limited
  4. BDO Unibank Inc.
  5. BDO Network Inc
  6. Bankok Bank Public Co. Ltd.
  7. BOGF Inc (A Rural Bank)
  8. Bank of America, N.A.
  9. Bank of China Limited – Manila Branch
  10. Bank of Commerce
  11. Bank of the Philippine Islands (BPI)
  12. China Bank Savings, Inc.
  13. China Banking Corporation
  14. Citibank, N.A.
  15. CIMB Bank Philippines, Inc.
  16. CTBC Bank (Philippines) Corporation
  17. DCPay Philippines, Inc (e-money issuer under the Coins.ph brand)
  18. Deutsche Bank AG
  19. Development Bank of the Philippines
  20. Dungganon Bank (A Microfinance Rural Bank), Inc.
  21. East West Banking Corporation
  22. Equicom Savings Bank, Inc
  23. First Consolidated Bank, Inc.
  24. Hongkong & Shanghai Banking Corporation
  25. Industrial Bank of Korea
  26. ING Bank., N.V.
  27. JP Morgan Chase Bank, N.A.
  28. KEB Hana Bank – Manila Branch
  29. Land Bank of the Philippines
  30. Maybank Philippines, Inc.
  31. Mega International Commercial Bank Co., Ltd.
  32. Metropolitan Bank and Trust Company
  33. Mizuho Bank, Ltd. – Manila Branch
  34. MUFG Bank, Ltd.
  35. Philippine Bank of Communications
  36. Philippine Business Bank, Inc., A Savings Bank
  37. Philippine National Bank
  38. Philippine Savings Bank
  39. Philippine Trust Company
  40. Philippine Veterans Bank
  41. Producers Savings Bank Corporation
  42. Rizal Commercial Banking Corporation
  43. Robinsons Bank Corporation
  44. Security Bank Corporation
  45. Shinhan Bank – Manila Branch
  46. Standard Chartered Bank
  47. Sterling Bank of Asia, Inc. (A Savings Bank)
  48. Sumitomo Mitsui Banking Corporation – Manila Branch
  49. UnionBank of the Philippines
  50. United Coconut Planters Bank
  51. United Overseas Bank Limited, Manila Branch
  52. Wealth Development Bank, Corp.
  53. Yuanta Savings Bank Philippines, Inc.

List of InstaPay Participants (as of September 2019)

Sender/Receiver:

  1. Asia United Bank Corporation
  2. Bank of Commerce
  3. BDO Unibank Inc
  4. Bank of the Philippine Islands
  5. BPI Family Savings Bank
  6. BPI Direct BanKO, Inc. A Savings Bank
  7. Cebuana Lhuiller Rural Bank, Inc.
  8. China Bank Savings, Inc.
  9. China Banking Corporation
  10. DCPay Philippines, Inc.
  11. Dungganon Bank (A Microginance Rural Bank), Inc.
  12. East West Banking Corporation
  13. Equicom Savings Bank, Inc.
  14. G-Xchange, Inc. (GCash)
  15. Land Bank of the Philippines
  16. Malayan Bank Savings and Mortgage Bank, Inc.
  17. Maybank Philippines, Inc.
  18. Metropolitan Bank and Trust Company
  19. Philippine Bank of Communications
  20. Philippine National Bank
  21. Philippine Savings Bank
  22. PNB Savings Bank
  23. Rizal Commercial Banking Corporation
  24. Robinsons Bank Corporation
  25. Security Bank Corporation
  26. Sterling Bank of Asia, Inc. (A Savings Bank)
  27. Sun Savings Bank, Inc.
  28. UnionBank of the Philippines
  29. United Coconut Planters Bank

Receiver Only***:

  1. AllBank (A Thrift Bank), Inc.
  2. Bangko Mabuhay (A Rural Bank), Inc.
  3. CTBC Bank (Philippines) Corporation
  4. Development Bank of the Philippines
  5. ING Bank N.V.
  6. Isla Bank (A Thrift Bank), Inc.
  7. OmniPay, Inc.
  8. Partner Rural Bank (Cotobato), Inc.
  9. PayMaya Philippines, Inc.
  10. Philippine Business Bank, Inc., A Savings Bank
  11. Philippine Trust Company
  12. Philippine Veterans Bank
  13. Quezon Capital Rural Bank, Inc.
  14. UCPB Savings Bank, Inc.
  15. Wealth Development Bank Corporation

This article is published on BitPinas: What is InstaPay and PESONet Philippines?

Notes:

*An Automated Clearing House or ACH is a multilateral legally binding agreement that lays down the clearing and participation rules for a particular payment stream to facilitate electronic fund transfers among its participants.

**Based on information found online, an e-money license is necessary for a company that intends to store e-peso, and most especially if the company’s product allows the use of e-peso as a way to pay for goods online

***Only recipients accounts. InstaPay is ultimate a funds transfer service but it depends whether the participating entity can send and receive or just receive.

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