Payment Rail Systems
Karthikeyan Sundaram
Karthikeyan Sundaram
May 26, 2024

PESONet: Enhancing Payments in the Philippines

In this article, we explore PESONet, the electronic fund transfer system in the Philippines. We'll discuss its key features, benefits, and how it is revolutionizing financial transactions across the country. Discover how PESONet enhances payment efficiency and security, making it an integral part of the Philippines' financial infrastructure.
PESONet: Enhancing Payments in the Philippines

PESONet is a new electronic fund transfer service that enables customers of participating banks, e-money issuers, or mobile money operators to transfer funds in Philippine Peso currency to other customers of participating institutions in the Philippines. It is a more inclusive platform for electronic fund transfers, making Government-to-Business (G2B) and Government-to-Consumer (G2C) payments more practical, convenient, fast, and secure. PESONet provides a perfect alternative to the still widely used paper-based check system.

Purpose of PESONet

Through PESONet, businesses, government entities, and individuals can conveniently pay or transfer funds from their accounts to one or multiple recipient accounts in other financial institutions. This service streamlines the payment process, enhancing the efficiency and convenience of electronic fund transfers across different financial entities.

How Does PESONet Work?

Customers using PESONet can utilize their bank or non-bank’s mobile app or online platform to send money to an account with another participating institution (e.g., Metrobank Online to BPI Online). To initiate a transfer, you need to provide the receiver’s financial institution, account number, and the amount to be transferred to the clearing switch operator, currently the Philippine Clearing House Corporation (PCHC). The funds are settled in the respective financial institution’s demand deposit accounts held in Bangko Sentral ng Pilipinas (BSP)’s Philippine Payments and Settlement System (PhilPaSS). Once settled, the funds are credited to the receiver’s account within the same banking day.

Benefits of Using PESONet

  • Cross-selling opportunities for products such as loans, deposits, insurance, and investments.
  • Digital innovation in delivering financial services.
  • A secure method for transferring salaries to employees.
  • Improved efficiency in fund transfers.
  • No fees deducted for the receiver.
  • An alternative to check payments, reducing associated costs.

PESONet operates during banking days with a prescribed cut-off time of 2 PM for same-day transmission to the receiving bank. Transactions received after the cut-off, on holidays, or weekends will be processed on the next banking day.

One major disadvantage is that PESONet transactions are not processed in real-time; instead, they are batch-processed, which can lead to delays in fund transfers, especially compared to instant payment systems like InstaPay. Additionally, PESONet typically operates only during banking hours, meaning transactions initiated outside these hours are processed the next business day. This lack of 24/7 availability can be inconvenient for urgent transactions. Lastly, transaction fees may apply, and these can accumulate for frequent users, making it less cost-effective for some individuals and businesses.