Applying institution (AI) to submit letter of intent to BancNet (BN) to be a Network Participant including:
all documents as detailed in the requirement checklist – Annex 1
For banks, copy of the Cover letter of application for Electronic Payment and Financial Services (EPFS) License filed to and received by the BSP
For EMIs, actual EPFS approval
For IADs, or as applicable, copy of Certificate of Registration (COR) as Operator of Payment System (OPS) from BSP
BancNet Management evaluation will only start upon submission of complete documentation based on items a, b, & c, above, as applicable. Minimum TAT from this point to Membership Committee approval is about 8 weeks. BOD approval shall depend on BOD meeting schedule.
Management to ascertain completeness of documents submitted by the AI and undertake initial evaluation.
Management to commission a third party to conduct background investigation/ verification of the applying institution and its corporate officers. AI should submit a document allowing the third party to conduct verification/ investigation.
**Membership Committee has the authority to exempt an institution to undergo third party investigation and verification. In case of exemption, management due diligence will suffice.
AI cooperation and support are enjoined so as not to delay the membership evaluation process. TAT of 8 weeks, as mentioned in item 2 above, could not be guaranteed if AI officers and other contact persons are uncooperative.
The result of the third party’s evaluation/ verification is detailed in a formal report, including Financial Analysis, based on the audited FS and other reports submitted by the AI.
Charges of the third-party evaluation shall be for the account of BancNet.
The results of the investigation/verification and the overall due diligence undertaken by Management are compiled together and a summary report is submitted to BancNet’s Membership Committee, including Management’s initial disposition regarding the AI’s application.
At this point, AI that is not a PhilPaSS participant is required to submit a confirmation letter from the AI’s designated “Settlement/ Sponsor Bank” signifying the latter’s willingness to be the Settlement/Sponsor Bank of the AI. The confirmation letter shall have to be submitted prior to the evaluation of the
Membership Committee. Membership Committee shall evaluate and act on the application. Membership Committee disposition:
Favorable disposition – acceptance of the AI as participant will be endorsed to the Board, for final approval.
Unfavorable disposition – Committee has the authority to immediately reject the application. Reason for rejection will be discussed by Management with the AI. Committee’s disposition is final and executory. Recourse to the AI is not guaranteed and may only apply on a case to case basis.
Appropriate Board resolutionsshall be passed for all approved applications.
Notwithstanding the Board approval, the AI will only be considered a bonafide participant of the Network once a Memorandum of Agreement (MOA) has been signed by the AI and BancNet and all monetary requisites as indicated in the MOA are paid for by the AI.
Board approval of the AI will be invalidated in case the MOA, referred to above, will not be signed within six months from the formal acceptance advise of BancNet. AI shall reprise the accreditation process should it wish to pursue its membership to BancNet, the second time.
B. After MOA Signing:
After MOA signing, BancNet Management to undertake necessary announcements, preparations, trainings, coordination/ project management and all other activities needed for the live implementation of the AI, now considered a Network Participant (NP).
A Relationship Manager shall be assigned to the NP who may also act as the Project Manager (PM) for the latter’s live implementation.
The PM shall be responsible in coordinating with all stakeholders regarding the preparations needed for the live implementation of the NP, such as but not limited to, product & services and backroom orientation, testings and certifications. The timelines and significant milestones preceding the date of live implementation are determined and agreed upon by the joint project teams of BN and NP.
Due diligence on the system readiness of the NP prior to go live shall be undertaken by the Risk and Compliance Group of BancNet.
Prior to going live:
A bank NP should submit a copy of its EPFS license if such has not been done yet. Failure to do so precludes BancNet from signing off the bank’s live implementation.
NP participating in the BSP’s PhilPaSS facility shall sign the PhilPaSS Participation form and submit to BancNet for processing. BN shall endorse the PhilPaSS participation form to the BSP-Payments and Settlements Office. BSP-PSO shall return a duly processed participation agreement of the NP to BancNet. BN shall in turn provide a copy to the NP.
If the NP is not a PhilPaSS participant, its Settlement/ Sponsor Bank should have submitted the “Undertaking” document to BancNet, prior to the NP going live. The “Undertaking” document details the roles and responsibilities of the Settlement/ Sponsor Bank.
Go-live is mutually set and agreed by all parties.
Go –live is preconditioned on the ff:
Endorsement of CRO and PM
Payment of all on-boarding fees, settlement deposit and guarantee letter from Settlement/Sponsor bank, as applicable
Submission of the EPFS license issued by the BSP to the NP, as applicable
Certificate of Registration as an Operator of a Payment System, as applicable
C. Commercial Terms & Cash Settlement Deposit:
Please refer to attached Annex 2 for Commercial Terms of membership
Cash Settlement Deposit
All Non-equity Network Participant (NP) are required to put-up a cash settlement deposit in the amount of PhP500,000 one week prior to going live. It serves as a settlement guarantee in case the NP defaulted in its daily or periodic settlement.
As a settlement guarantee, the cash settlement deposit will not be used to settle the NP’s daily obligation but serves as an instrument to manage settlement risk. It shall remain untouched by BancNet unless a case of settlement default arises. BN records all deposits as payable. This is non-interest bearing regardless of whether BancNet earned an interest by pooling all deposits together and placing it in a bank under BancNet’s name.
Daily, settlement is done through PhilPaSS, wherein the DDA of the NP or its Settlement Bank (in case of EMI) is debited or credited depending on its net settlement position after each settlement cut-off period. Prior to going live, a new participant will execute an Agreement with BSP giving rise to PhilPaSS settlement once the NP goes live as a BancNet participant. This is not applicable to an EMI as its Settlement Bank settles for and in behalf of the EMI.
Settlement among the network participants through BSP-PhilPaSS facility is done 2 times a day, as follows:
Intra Day Settlement – covers txns from 12:01am to 1:00PM – settled within the 3PM to 4PM settlement window on T1 or txn day
Full Day Settlement – covers txns from 12:01am to 12 midnight – settled T+1 within the 10am to 11 am settlement window
The cash settlement deposit is due and demandable in full from BancNet (without interest) once the NP terminates its membership MOA, net of any unpaid dues to BN.
After MOA signing and prior to go live, the NP, regardless of being a PhilPaSS Participant, shall engage a sponsor bank who shall provide additional guarantee to the NP. A sponsor bank should be an equity member of BancNet and has the responsibility to ensure settlement obligations of the sponsored NP up to a specific amount.
