PESONet Rules & Regulations

Updated: Dec 12, 2020

RULES AND REGULATIONS FOR THE

PHILIPPINE EFT SYSTEM & OPERATIONS NETWORK

AUTOMATED CLEARING HOUSE (“PESONet”)


Section 1 – PURPOSE OF RULES


These Philippine EFT System & Operations Network (PESONet) Automated Clearing House (the ACH) Rules and Regulations serve to provide the basic understanding and agreement by and among its Participants, and to define the responsibilities of the Clearing Switch Operator (CSO), the Bangko Sentral ng Pilipinas (BSP), the responsibilities and liabilities of the Participants, as well as the relationships between and among the CSO, BSP, and the Participants.


Section 2 – OBJECTIVES


The objectives of the PESONet are:


2.1

To establish a secure, efficient, and cost-effective clearing facility for a fully electronic batch fund transfer system for payments, where the payer sends a payment instruction to their financial institution to transfer funds from their account to one or more Beneficiary Accounts maintained at another financial institution. The fund transfer instructions are processed and cleared at batch intervals with each payee receiving full value into their account.


2.2

To provide the banking and financial community with an infrastructure that will support and promote the design, development, implementation, and usage of electronic banking products and related services; and


2.3

To promote electronic commerce in both the local and global environments as embodied in the Electronic Commerce Act (R.A. 8792).


Section 3 – AGREEMENT TO THESE RULES


Any Participant, by the mere act of its continued participation in the PESONet, is deemed to be in agreement to these Rules and Regulations, and all subsequent amendments to it.


Section 4 – DEFINITION OF TERMS


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As used in these Rules and Regulations:


4.1

Banking Day means a day on which banks are open for business, except Saturdays, Sundays, non-working days on the basis of declaration of holidays or suspension of work by authorized government authorities.


4.2

BSP means the Bangko Sentral ng Pilipinas.


4.3

Beneficiary means the natural or juridical person named as the owner of the Beneficiary Account.


4.4

Beneficiary Account means the bank account maintained with the RFI designated in a Payment Item to be credited the Payment Amount.


4.5

Clearing Switch Operator (CSO) – the party selected to act as the system operator of the clearing system to be used by the Participants, according to the guidelines and authorities set in the ACH Charter and applicable annexes thereto.


4.6

Clearing Day refers to a Banking Day on which the CSO receives Payment Items for processing and net settlement reports are generated and sent to the BSP for settlement.


4.7

Demand Deposit Account or DDA means the demand deposit account of a Participant maintained with the BSP.


4.8

IBCL Rate (Interbank Call Loan) is the lending rate among banks for periods generally not exceeding 24 hours primarily for the purpose of covering reserve deficiencies.


4.9

Netting Session – refers to the procedure wherein the CSO will process all outstanding Payment Items sent by the Participants, and generate the net settlement report for each Participant. BSP will then post the corresponding debit or credit entries to the Participants’ DDA according to the net settlement report. There may be multiple Netting Sessions on each Clearing Day.


4.10

Netting Time – the times of the Clearing Day as determined by the PESONet Steering Committee when the Netting Sessions will occur


4.11

Originating Financial Institution (OFI) means a Participant that sends a Payment Item to another Participant.


4.12

Participant means a financial institution that participates in the PESONet either as an OFI, RFI, or both.


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4.13

Payment Item means an electronic instruction from an OFI to an RFI to effect credit of the Payment Amount to the Beneficiary Account.


4.14

PhilPaSS refers to the Philippine Payments and Settlements System, which is the real time gross settlement system operated by the BSP.


4.15

Receipt Date means the Banking Day on which a Payment Item is received by the RFI, or a Returned Item is received by the OFI.


4.16

Return Item - Any Payment Item that is to be returned by the RFI to the OFI because it is rejected or cannot be posted by the RFI to the designated Beneficiary Account for any reason, except for Payment Items which are withheld for posting according to applicable Anti-Money Laundering and Terrorist Financing rules and regulations


4.17

Receiving Financial Institution (RFI) means a Participant that receives a Payment Item from another Participant.


4.18

Settlement – successful posting of all debit or credit entries by the BSP on the Participants’ DDA, or in the case of Sponsored Participants – on the Sponsoring Participants’ DDA, based on the net settlement report received by the BSP from the CSO.


4.19

Settlement Date means the Banking Day on which the BSP posts debits and credits to the Participants’ or Sponsoring Participants’ DDA which should always be effected on the Clearing Date of the relevant Payment Item/s of that Participant.


4.20

Settlement Finality means the transfer of value of funds irrevocably and unconditionally to the Beneficiary Account


4.21

Payment Amount means the amount in Philippine Pesos specified in the Payment Item for credit to the Beneficiary Account.


4.22

Sponsored Participant refers to a Participant who is not a PhilPaSS member but directly participates in PESONet through an arrangement with a Sponsoring Participant, whereby the latter allows the former to settle their PESONet transactions through the latter’s DDA.


4.23

Sponsoring Participant means a Participant who is a direct member of PhilPaSS, who enters into an arrangement with another Participant who is not a member of PhilPaSS, allowing the latter to settle their PESONet transactions through the former’s DDA.


4.24

Transaction Reference Details refers to information relating to the transaction purpose, such as invoice numbers, bill reference numbers,


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utility account numbers, mobile phone numbers, etc., which are either provided by the payer or automatically provided by the OFI.


Section 5 – PARTICIPATION


5.1

To be a Participant, a financial institution should be a signatory to the PESONet ACH Agreement.


5.2

At the minimum, the financial institution should:

a. be duly licensed by the BSP to open and operate bank or electronic money accounts for the public

b. comply with all the requirements for such participation, as provided for in the PESONet on-boarding guidelines and procedures, including payment of setup fees, if any, to the CSO

c. have a DDA and be a member of PhilPaSS or otherwise be sponsored by a Sponsoring Participant

d. have the capacity to process electronic payment instructions


5.3

The PESONet ACH steering committee will determine the eligibility of applicants. The applicant shall be notified in writing by the ACH, attaching thereto the notice from the CSO of their successful enrollment to PESONet


5.4

Each Participant agrees and undertakes to abide by and comply with the rules and regulations of the ACH, all applicable laws, regulations, ordinances and codes, including but not limited to issuances by the BSP.


Section 6 – WITHDRAWAL OF PARTICIPATION


6.1

Any Participant that elects to withdraw, whether temporarily or permanently, from the PESONet shall notify the PESONet Steering Committee and the CSO in writing sixty (60) calendar days before the desired effectivity date. Upon effectivity of such withdrawal, Payment Items from/to the withdrawing Participant shall no longer be accepted for processing.


6.2

The PESONet Steering Committee will confirm its acceptance of the Participant’s termination within 30 calendar days from receipt of the notification.


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6.3 The PESONet Steering Committee will inform Participants via broadcast messages regarding any voluntary termination at least thirty (30) calendar days before the termination takes effect.


Section 7 – SUSPENSION/EXCLUSION


7.1

The PESONet Steering Committee may recommend to the Payments System Management Body the suspension/exclusion from the PESONet of any Participant for material breaches of the PESONet Rules and Regulations.


7.2

In the event of a strike, civil disturbance, self-declared holiday or fortuitous event which prevents an RFI from processing incoming Payment Items, notice of such circumstance shall be given to the CSO which shall in turn inform all other Participants in order for the OFIs to inform their payers that Payment Items to the RFI shall be held in abeyance until such time the RFI resumes participation. In such cases, Payment Items to the RFI concerned shall be temporarily rejected by the CSO.


7.3

The provision of any BSP directive or court order providing for the suspension/exclusion of any Participant from the PESONet shall be observed and be binding on all Participants.


7.4

The suspension or closure of a Participant’s or a Sponsoring Participant’s DDA, or their exclusion or suspension from PhilPaSS, shall automatically mean the suspension of the Participant from the PESONet. The Participant should inform the PESONet Steering Committee and the CSO as soon as practicable upon knowledge of such suspension of their or their Sponsoring Participant’s DDA.


7.5

If a Participant or its Sponsoring Participant is placed under receivership or liquidation by the BSP, or closed-down by the BSP due to violations of banking rules or willful disregard of regulations, the Participant shall automatically be suspended from PESONet.


7.6

The PESONet Steering Committee will inform Participants via broadcast messages regarding any involuntary termination immediately upon receiving such information. Transactions that have already been settled prior to suspension of the Participant are still considered final and irrevocable.


Section 8 – AVAILABILITY OF FACILITIES


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The PESONet facility shall be available to the Participants every Banking Day, except to suspended/excluded Participants.


Section 9 – TRANSMISSION OF PAYMENT ITEMS


9.1

Payment Items shall conform strictly to the technical requirements as defined and specified by the CSO, but as a minimum, it should contain the following information:

a. payer’s name

b. payer’s account number

c. Payment Amount

d. beneficiary name

e. Beneficiary Account number

f. Beneficiary Bank / RFI

g. OFI transaction reference number


9.2

Payment Items that do not pass validation and authentication shall be rejected by the CSO.


9.3

Payment Items shall be sent electronically, either in batches or individually, to the CSO. OFIs may transmit the Payment Items on a Clearing Day any time from system start time to system end time. The CSO, upon the instruction of the PESONet Steering Committee, shall notify all Participants of the official system start and end times, including all subsequent amendments or changes thereto.


9.4

Payment Items received by the CSO before the prescribed Netting Time of a Clearing Day shall be processed and the net settlement report for the Participants shall be generated after each Netting Session. There may be multiple Netting Sessions on a Clearing Day. The PESONet Steering Committee is authorized to prescribe the frequency of the Netting Sessions, as well as the Netting Times. The CSO, upon the instruction of the PESONet Steering Committee, shall notify all Participants of the frequency of the Netting Sessions and the prescribed Netting Times, including all subsequent amendments or changes thereto.


9.5

The CSO shall assign a unique reference number for each Payment Item, which shall be used by the Participants when tracing a Payment Item or submitting a Return Item.


9.6

By sending a Payment Item, the OFI warrants and agrees that:


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a. Appropriate watchlist screening or monitoring on the payer and its transactions are regularly performed according to applicable BSP regulations or circulars

b. the account name of the source account and the amount are consistent with the Sender Name and the amount indicated in the Payment Item

c. the Payment Item is fully funded by the payer, or the OFI takes full credit risk on any shortfall in funding

d. the Payment Item is immediately executable (i.e. not future dated)

e. the Payment Item is deemed irrevocable upon clearing.

However, the right of the OFI to recover any Settled Payment Amount outside the purview of the PESONet shall remain to be governed by the general principles of law.


9.7

Payment Items shall be covered by corresponding instructions executed by the payer, which has been verified and authenticated by the OFI, with indication of the name of the intended Beneficiary and the Beneficiary Account number in a prescribed format.


9.8

OFIs may charge reasonable service fees to the payers intending to send Payment Items in accordance with applicable pricing principles, circulars or regulations published by the BSP.


Section 10 – INTERBANK SETTLEMENT


10.1

After every Netting Session, the Participants authorize the CSO to generate the corresponding electronic debit and credit entries on the basis of the various OFI’s Payment Items, and to transmit the net settlement report to the BSP for posting of the entries to the respective DDAs of the Participants or Sponsoring Participants on Settlement Date.


10.2

The Participants and Sponsoring Participants authorize the BSP to post debits and credits to their DDAs on the basis of the net settlement report transmitted by the CSO.


10.3

Settlement Finality of debits and credits to Participants’ and Sponsoring Participants’ DDAs shall be in accordance with the BSP’s settlement rules, policies, and schedules.


10.4

Participants and Sponsoring Participants shall verify their respective transactions as reflected in the reports to be furnished by CSO.


10.5

Participants and Sponsoring Participants shall verify the final settlement amounts as reflected in the statements of account to be furnished by BSP.


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10.6

Participants and Sponsoring Participants should promptly raise any inconsistencies with regards to reports or statements furnished by the

CSO and the BSP.


Section 11 – SETTLEMENT FAILURES


11.1

Settlement is considered failed when the BSP cannot successfully post debits or credits to one or more of the Participants’ / Sponsoring Participants’ DDAs for any reason, such as, but not limited to:

a. the Participant’s DDA has insufficient funds to support the debit despite a curing period provided to the Participant to cure the insufficient balance in the DDA

b. the Participant’s DDA has been closed or put on hold /freeze status


11.2

Immediately after posting the net settlement files, the BSP should inform the CSO immediately if any of the Participants’ accounts have insufficient balances to support the debit.


11.3

The CSO, upon notification by the BSP of any Participant(s) with insufficient DDA balances, shall perform the following:

a. Promptly notify and inform the Participant(s) who caused the settlement failure

b. Withhold the release of the clearing results for that Netting Session to all the Participants until such time that settlement is confirmed


11.4

The Participants are responsible for monitoring their respective DDAs for any pending debits due to insufficient balances, and have to promptly fund their DDAs so that settlement can proceed.


11.5

The Participants will be given a curing period (to be determined by the PESONet Steering Committee) to fund their DDA. After the lapse of the curing period, settlement is considered failed.


11.6

Upon occurrence of settlement failure, the CSO will re-process the transactions and generate a revised net settlement report which excludes all Payment Items from the Participants with insufficient DDA balances.


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11.7

Participants that cause settlement failures may be charged penalties as determined by the PESONet ACH Steering Committee.


Section 12 – RECEIPT OF SETTLED PAYMENT ITEMS


12.1

Settled Payment Items shall be validated and processed by the RFIs on their respective Receipt Dates.


12.2

RFIs shall post / credit the Payment Amount to the Beneficiary Account specified on the Payment Item on Receipt Date, and funds shall be made available and withdrawable according to the funds availability schedule (to be determined by the PESONet Steering Committee) set for each Netting Session or at the latest, by end of Receipt Date. However, if crediting to the Beneficiary Account is deferred due to regulatory or the Participant’s policy to comply with Anti-Money Laundering risk management, the RFI must send notification to the OFI via appropriate means advising the reasons therefore.


12.3

By crediting a Payment Item to the Beneficiary Account, the RFI warrants:

a. that the Beneficiary Account indicated in the Payment Item matches a valid account number maintained with the RFI

b. that appropriate watchlist screening or monitoring on the beneficiary and its transactions are regularly performed according to applicable BSP regulations or circulars


12.4

The Payment Amount shall be credited in full to the respective Beneficiary Account, without deduction for any fees and charges.


12.5

The RFI shall provide the CSO-generated unique reference number and the Transaction Reference Details to the beneficiary either through their transaction records, bank statements, credit advice or other similar confirmations or reports.


12.6

Once the Beneficiary Account has been correctly and accurately credited, the transfer of value of funds is deemed final and irrevocable.


Section 13 – RETURN ITEMS


13.1

RFIs have an obligation to transmit all Return Items promptly without delay, except for reasons where the Payment Item cannot be readily processed due to AML or regulatory impediments. For Payment Items that cannot be readily processed or returned due to AML or regulatory


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impediments, procedures under existing applicable law or regulation shall apply.


13.2

All Return Items, or notifications for deferred credits defined in Section 13.1 should be transmitted to the CSO promptly, and no later than the cutoff time to be prescribed by the PESONet Steering Committee.


13.3

Return Items shall be returned by the RFI to the OFI in full and without deduction for any fees, and should conform to agreed standards and formats. At a minimum, this should indicate the Payment Item’s unique CSO generated reference number and the reason or reason code for the

return.


13.4

The PESONet Steering Committee will determine a Return Item fee for processing of Return Items, such fee to be charged by the RFI to the OFI.


13.5

By sending a Return Item, the RFI agrees that:

a. the Return Item is irrevocable after clearing

b. the Return Item is immediately executable

However, the right of the RFI to recover any settled Return Item outside the purview of the PESONET shall remain to be governed by the general principles of law.


13.6

Settled Return Items shall be validated and processed by the OFIs, and credited by the OFI back to the payer on their respective Receipt Dates. The OFI may charge reasonable service fees to the payers for processing of Return Items in accordance with applicable pricing principles, circulars or regulations published by the BSP.


Section 14 – RISK MANAGEMENT


14.1

The PESONet Steering Committee, in coordination with the CSO and the BSP, shall establish internal controls, policies, guidelines and procedures consistent with industry best practices to ensure the integrity of processing, data confidentiality, records retention and cybersecurity within each party’s respective areas of operation.


14.2

The PESONet Steering Committee, in coordination with the CSO and the BSP, shall establish a comprehensive business continuity plan in order to ensure uninterrupted PESONet processing at each party’s respective points of operations. The Participants, the CSO, and the BSP shall conduct regular testing of the business continuity plan.


Section 15 – ORGANIZATION OF SUB-COMMITTEES


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The PESONet Steering Committee may establish various sub-committees (whose members may be comprised of non-official representatives of the Participants in PESONet), who are subject matter experts, to advise the PESONet Steering Committee in the formulation and implementation of strategies, policies and plans. However, all sub-committee recommendations have to be vetted and approved by the PESONet Steering Committee prior to implementation.


Section 16 – ASSESSMENT OF FEES & PENALTIES ON PARTICIPANTS


16.1

Participants shall be assessed CSO clearing fees, Return Item fees and penalties as imposed by the PESONet Steering Committee after the end of each calendar month, such fee amounts to be determined by a pricing structure to be approved or amended by the PESONet Steering Committee.


16.2

Fees and penalties will be debited from each Participant’s or Sponsoring Participant’s DDA account based on a schedule to be determined by the PESONet Steering Committee.


16.3

All fees and penalties due from or due to a sponsored Participant shall be settled through the DDA of the Sponsoring Participant. It is up to the Sponsoring Participant and the sponsored Participant to reconcile such fees and penalties among themselves.


16.4

Participants should notify the CSO immediately on any disputes on each Participant’s assessed fees and penalties, based on a cutoff schedule to be determined by the PESONet Steering Committee.


Section 17 – GENERAL SANCTIONS


Violations or non-compliance with these Rules and Regulations shall be subject to penalties or sanctions as may be imposed by the PESONet Steering Committee.


Section 18 – ARBITRATION


Any dispute involving Participants which cannot be resolved amicably by the PESONet Steering Committee shall be referred to the BSP recognized Payments Systems Management Body for arbitration.

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