Interoperable auto-debit system set for launch in ’26

The Bangko Sentral ng Pilipinas (BSP) will roll out a direct debit facility this year, a long-planned move that regulators say is likely to gain wide acceptance because it offers greater convenience for customers and more efficient collections for billers.

“We piloted it last year. So, we’re getting ready this year,” BSP Deputy Governor Mamerto Tangonan told reporters on the sidelines of the BSP’s annual reception for the banking community last week.

The Direct Debit Facility will be the country’s first interoperable and multilateral auto-debit scheme. It will allow customers to better manage recurring payments such as monthly rent, loan amortizations and insurance premiums by authorizing billers to pull funds directly from their accounts.

For payees, a direct debit arrangement can streamline collection efforts and improve liquidity management by providing greater certainty that expected cash inflows are realized on time.

Recurring bills paid through direct debit are settled on time and in full, reducing the risk of late fees or penalties. Unlike cash or check payments, the system offers an automated and seamless way to handle payment transactions.

Customers no longer need to remember payment due dates, while businesses can cut back on resources spent chasing payments or processing checks, helping ensure steadier revenue and lower administrative costs.

Setting up direct debit typically requires a bank account, valid identification and authorization from the account holder. Transactions are protected by encryption and verification processes designed to safeguard users.

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Direct debit is one of three electronic payment streams announced by the BSP in 2022. That year, the central bank launched Bills Pay PH, which allows customers to pay electricity, water and telephone bills even if the customer and biller maintain accounts at different financial institutions.

The BSP is also planning to launch a “request to pay” system that would allow payees to initiate collections by sending a digital request to the payor, who would only need to authorize the transaction.

The three initiatives are meant to promote digital payments in the country. By 2024, data showed digital payments accounted for 57.4 percent of all retail transactions, up from 52.8 percent a year earlier—a result that exceeded the government’s target of 52 to 54 percent.