The Philippines is taking a closer look at how payment companies operate, particularly where digital payments, merchants and crypto businesses meet.
The Bangko Sentral ng Pilipinas (BSP) has proposed suspending new registrations for payment system operators for 12 months while it reviews its classification and licensing framework. The proposal also introduces tighter requirements for payment arrangements involving virtual asset service providers (VASPs).
Under the draft circular, the BSP would stop accepting and processing new applications for Operators of Payment Systems (OPS) during the proposed suspension. Applications submitted before the freeze would still be evaluated, but the central bank would not approve or reject them until the suspension ends.
The BSP said the pause would give it time to conduct a broader review of how payment system operators are classified, licensed and supervised, including the risks associated with their activities.
The proposal does not mean existing payment operators would have to stop operating. However, companies that want to begin activities requiring OPS registration during the suspension would need separate authorization from the central bank.
At the same time, the BSP wants to make merchant payments easier to trace. One major part of the proposal would require financial institutions supervised by the central bank to identify the actual merchant behind a transaction and the person or business ultimately receiving the money.
This is particularly important for payment arrangements involving intermediaries. The BSP wants institutions to be able to identify who is receiving funds, trace transactions back to the correct merchant and reconcile payments properly.
The proposed rules would also introduce stronger checks for higher-risk businesses, including regulated virtual asset service providers, gambling operators, gaming businesses that handle customer funds, money service businesses and certain adult-oriented businesses. These businesses could face enhanced due diligence, closer monitoring and transaction or settlement limits based on their risk levels.
For crypto companies, the rules could make it harder to use complicated payment structures involving multiple intermediaries. BSP-supervised institutions working with regulated VASPs would generally need direct merchant arrangements and stronger controls around the transactions.
The VASPs involved would also need to hold the appropriate license, registration or authorization from the BSP, the Philippine Securities and Exchange Commission or another relevant regulator.
The central bank is also proposing a centralized database for merchants that accept QR-based payments. The system would record whether a merchant is active, restricted, suspended or terminated, allowing other payment providers to take the merchant’s status into account when reviewing their own relationships.
The proposed framework also places tighter reporting requirements on payment institutions. Material fraud or scam incidents, sanctions violations, cybersecurity or data breaches, unlicensed activity and illegal merchant activity would have to be reported within 24 hours of detection. A more complete report would generally be required within five business days.
The BSP’s proposal comes as regulators continue to focus on fraud, money laundering and consumer risks linked to increasingly complex digital payment networks. The central bank has also maintained a moratorium on new VASP licenses, citing concerns including consumer protection and cybercrime.
If approved, the payment operator suspension would begin under the terms set out in the final circular. The proposal is still a draft, so the exact implementation details could change before the rules take effect.
For payment companies and crypto businesses operating in the Philippines, the direction is clear: the regulator wants greater visibility into who is receiving money, where transactions are going and which businesses are allowed to participate in the payment system.
The proposed 12-month freeze gives the BSP time to review the existing framework while putting stronger controls around higher-risk payment activities. For the crypto sector, the tighter requirements could mean more compliance work, but they also give regulated operators clearer expectations for participating in the country’s payment infrastructure.