Forgetting to pay a monthly bill or writing stacks of post-dated checks could soon become a thing of the past.
The Bangko Sentral ng Pilipinas (BSP) and the Philippine Payments Management, Inc. (PPMI) on Wednesday launched Direct Debit PH, a new digital payment service that allows customers to automate recurring payments across participating banks and e-wallets.
The service allows customers to authorize billers such as utility providers, insurance companies, subscription services, and other merchants to automatically collect payments from their accounts on scheduled due dates through a formal mandate.
Unlike traditional auto-debit arrangements, Direct Debit PH is interoperable across participating financial institutions, allowing customers to pay billers even if they use different banks or e-wallet providers.
For consumers, the biggest advantage is convenience, said Direct Debit PH Steering Committee and PESONet Chairman Carlo Nazareno.
“Why would you even bother yourself and write 60 checks for a 12-month or five-year payment if all you can do is set up that mandate once?” he said.
Nazareno noted that Direct Debit PH was designed with several safeguards to address concerns about unauthorized deductions.
Customers remain in control of their accounts, as they must first activate the payment mandate before any automatic debit can take place. They can also cancel the authorization at any time.
“The challenge with Filipinos is we don’t like people debiting our account. So how do we get them to be comfortable? We want you to have full control with what you agree with and don’t agree with,” he said.
Users can also set a maximum amount that may be automatically deducted.
For example, a customer whose usual electricity bill is around P2,000 may authorize automatic payments only up to P3,000.
“If the biller tries to collect above what you agreed, it will be rejected,” said Nazareno.
“Best practice is 15 days minimum before the due date, the bill should arrive to you and say it’s within this amount and it’s within the mandate we agreed so please expect the debit to happen. If it’s above that, the message you should receive from the collector is it’s above what we agreed so either give me a new mandate or pay me through traditional methods,” he further explained.
He said customers may also set an expiration date for the authorization.
The new payment system is also expected to benefit businesses by simplifying the collection of recurring payments.
Nazareno said companies currently offering automatic debit arrangements often need to maintain separate agreements and bank accounts with multiple financial institutions, making collections more expensive and administratively complex.
“Although auto-debit arrangement is electronic, management-wise on the corporate side is also quite complex because it’s limited by how many bilateral agreements I actually have… Aside from having multiple banking accounts, which is expensive for me, admin-wise, I have to reconcile all of those accounts and I then have to move it to a single account for me to access,” he said.
He added that eliminating manual processes such as handling post-dated checks could also reduce administrative costs while improving cash flow, since businesses can better predict when payments will be received.
Direct Debit PH is initially available through four participating banks, BDO, Bank of the Philippine Islands (BPI), Rizal Commercial Banking Corporation (RCBC), and China Banking Corporation. More banks and financial institutions are seen to follow suit.
“We want to mandate all the PESONet members which are over 120+ banks,” he said.
The BSP and PPMI also introduced two new InstaPay services aimed at making digital fund transfers more convenient for consumers and businesses.
InstaPay for Business raises the maximum transfer limit for registered businesses to P500,000 per transaction, which is 10 times the regular InstaPay limit of P50,000, to support larger business-to-business and business-to-consumer payments.
“Payroll, supplier payments, business transactions are all covered. And this happens instantly and interoperably… No more waiting for the next banking day,” said BSP Deputy Governor Mamerto Tangonan.
The service is currently available through the Philippine National Bank (PNB), Wise Pilipinas Inc., DCPay Philippines Inc., GoTyme, and RCBC.
Meanwhile, InstaPay Cash-In lets users request money from another person without switching between apps, with the sender able to fulfill the request directly from their bank or e-wallet account.
Participating banks and EMIs include:
- AllBank
- BPI
- Chinabank
- GoTyme
- G-Xchange Inc. (GCash)
- MariBank Philippines, Inc.
- ShopeePay Philippines, Inc.
