Starting January 2025, the Bangko Sentral ng Pilipinas (BSP) has required banking institutions in the Philippines to process refunds for failed fund transfers faster than ever, marking a significant shift in enhancing customer experience and promoting digital trust.
In a media advisory, the BSP has introduced new guidelines mandating financial institutions to return funds within hours rather than days, a move aimed at fortifying the country’s digital payment ecosystem.
This directive applies to two key payment systems under the BSP’s National Retail Payment System (NRPS): InstaPay and PESONet, which have become pillars of the Philippines’ digital finance revolution.
BSP’s accelerated refund timelines
Under the updated rules:
- Refunds for InstaPay, a real-time payment platform for low-value transactions up to ₱50,000, must be processed within one hour of receiving a failed payment instruction.
- For PESONet, which handles high-value, batch-clearing transactions akin to electronic checks, funds must be returned within two hours of receiving the settlement report from the clearing switch operator.
This expedited process is expected to significantly reduce customer anxiety over failed transactions and foster greater confidence in digital payments, aligning with BSP’s goals of financial inclusion and digital adoption.
PESONet and InstaPay: Transforming payment systems
The increased adoption of PESONet and InstaPay has been a driving force in the Philippines’ transition toward a cash-lite economy.
According to the latest BSP report, these platforms have collectively handled ₱13.99 trillion worth of transactions as of October this year, which offers a 34.6% increase compared to the previous year.
Other key highlights from the report:
- PESONet transactions surged to ₱8.17 trillion, a 28% increase year-on-year, with its volume growing to 82.9 million transactions.
- InstaPay posted even stronger growth, with its transaction value soaring by 45% to ₱5.82 trillion, and its volume reaching 1.11 billion transactions, a 68.3% increase.
These figures underscore the growing reliance of Filipinos on digital payment systems for personal and business transactions. In an earlier advisory, the BSP also reported that e-payments have continued to rise in the country with PESONet and InstaPay transactions reaching ₱10.9 trillion this year, surging by more than 34% between January and August 2024.
Implications for banking institutions
For banks, these new standards present an opportunity to:
- Enhance operational efficiency: By automating and streamlining refund processes, banks can improve transaction accuracy and reduce customer complaints.
- Bolster customer loyalty: Faster refunds demonstrate reliability and responsiveness, helping institutions build stronger relationships with their clients.
- Drive digital growth: As confidence in digital payments grows, banks can expect increased adoption of their online banking services, creating opportunities for cross-selling financial products.
Additionally, as more Filipinos transition to digital platforms, banks stand to benefit from broader financial inclusion.
The BSP’s goal to increase digital payment usage to 60-70% of total retail transactions by 2028 aligns with the government’s Philippine Development Plan for 2023–2028, paving the way for a more integrated and inclusive financial ecosystem.
A safer, more inclusive payment landscape
The success of PESONet and InstaPay highlights the role of digital platforms in making banking more accessible and efficient.
With the introduction of faster refund processes, the BSP aims to address consumer concerns, enhance the reliability of these systems, and solidify the foundation for a safe, inclusive, and cost-effective retail payment environment.
As banking institutions adjust to these new standards, they also contribute to a broader goal of strengthening the financial system and enabling economic growth.
The continued rise in digital transactions signals not just a shift in consumer behavior but also a growing opportunity for banks to lead in innovation and customer-centric services.
For more information about the BSP’s digital initiatives and updates on InstaPay and PESONet, visit www.bsp.gov.ph.