Published 30 May 2022, The Daily Tribune
Digital payment and electronic fund transfer are the future of payments. In Executive Order (EO) 170, “Adoption of Digital Payments for Government Disbursements and Collections,” signed by President Rodrigo Roa Duterte on 12 May 2022, the government mandated the acceptance of digital payments and collection for disbursements, fees and charges.
Under Section 27 of Republic Act (RA) 8792, or the Electronic Commerce Act, government offices and instrumentalities, including government-owned or controlled corporations (GOCC), are mandated to provide a method and manner of payment and to require/accept payments using electronic data messages or electronic documents. This includes issuance of receipt acknowledging payments.
On the other hand, RA 11032, or the “Ease of Doing Business and Efficient Government Service Delivery Act of 2018,” declares it a state policy to accept digital payments in government collections. It is seen as a way to promote delivery of services, expedite transactions, boost revenue and even to reduce the risk of graft and corruption.
To implement such mandate, EO 170 directs all government offices, including state universities and colleges and GOCC, and encourages local government units to adopt digital payments for their disbursements and collections.
Digital payment refers to a monetary payment transaction through a digital payment instrument, where both parties (payor and payee) use an electronic channel. Using digital payment for disbursement entails crediting the recipient or beneficiary’s transaction account through an Advice to Debit Account sent to Government Servicing Banks (GSB), i.e., the banks authorized to accept government deposits and perform banking services on behalf of the government entity. Digital disbursement can also be by Electronic Fund Transfer (EFT) facilitated by the (GSB).
Under such arrangement, the government entity is responsible for preparing the payment instructions with all the necessary details, such as the beneficiary, transaction account and amount involved. The GSB must carry out the payment instructions and submit to the government entity a verified list of successful and failed transfers. They are allowed to collect their fees from the government entity for EFT services, subject to their contractual arrangements.
Digital collection involves receipt of payment though digital devices, such as mobile phones, Point of Sale (PoS) or computer, and where payment is made through bank transfer, electronic money and payment cards, such as credit or debit cards. To collect payments for taxes, fee, toll and other charges, the covered agencies may also engage the services of established payment service providers, such as banks or non-bank electronic money issuers providing payment services for consumers, merchants and billers.
Note that only interoperable payment solutions, which are compliant with the National Retail Payment System Framework, may be availed. The partner payment service providers of covered agencies shall not be limited to GSB. Upon the creation of the Technical Working Group to provide guidance and craft rules for the implementation of the EO, the Government Procurement Policy Board may also issue specific procurement guidelines for the engagement of payment service providers.
Further, the EO does not foreclose the acceptance of cash and other traditional modes of payment in lieu of digital payments. The government entity must adopt a Business Continuity Plan to prepare for calamities and emergencies where payments through digital means may not be available. It must ensure that the provisions of the Data Privacy Act are observed.
The Department of Finance, in coordination with relevant government agencies such as the Bangko Sentral ng Pilipinas and Bureau of Internal Revenue, shall issue the Implementing Rules and Regulations (IRR) within 90 days from effectivity of the EO. Covered agencies must fully implement digital collection and disbursement within six months from the issuance of the IRR. As to digital payments, tiered transition is allowed based on operational readiness and capability of the covered agency, but not exceeding three years from the issuance of the IRR.
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