Smaller banks too gear up for tougher online gambling regime

Manila, Philippines – A looming tougher regulation on e-wallet payments for online casino games could set off a spending spree among banks as far as the countryside.

With most thrift banks still maintaining brick-and-mortar business models, they will have to set aside extra capital to buy fintech systems to comply under a stricter online gambling regime.

A draft circular by the Bangko Sentral ng Pilipinas (BSP) distributed to the banking industry – savings banks included – compels online gamblers to open an e-wallet account solely for gambling transactions, adding to the string of proposed measures to scrutinize online casino activities.

Less than half of the 37 member-banks of the Chamber of Thrift Banks are handling transactions either via InstaPay or PesoNet payment systems, industry data show. These thrift banks have a combined 2,600 branches nationwide, about 70% of them have licenses for electronics payment and financial services to engage in online banking and other digital payments.

When asked about the cost implications of the proposed central bank rules, Jaime Valentin Araneta, Chamber of Thrift Banks trustee and Citystate Savings Bank president said, “There will be.”

“But the overwhelming response of big fintechs to come in, as sponsors or exhibitors for our conference, shows us that the cost of investing in the required technologies is actually over time getting democratized,” Araneta, who is also the co-chairman of the chamber’s convention committee, said in a Tuesday, July 15, interview on the sidelines of the Chamber of Thrift Banks’ National Convention 2025 in Makati City.

“Eventually these costs will be coming down so that even the mid-sized or smaller thrift banks should be able to do what is necessary to safeguard banking transactions,” he said.

Under the draft BSP circular, a mandatory facial biometric verification for account opening and periodic biometric verifications will be required to curb fraud.

“All along we’ve been very careful about having our accounts possibly used for certain types of purposes or activities. I think what preceded all these in fact was the Anti-Financial Scamming Act. The BSP is really requiring banks to really strengthen their fraud management systems solutions, Araneta said.

The new rules also impose a daily ceiling on transactions - no more than 20 percent of the average daily balance of the eligible owner’s transaction account.

The transaction window has also been set for up to six hours a day.

The sanctions include a monetary penalty of up to P1 million for each transactional violation. Non-monetary penalty would entail the suspension or revocation of authority to offer online gambling payment services.

Smaller-sized lenders – even as their business is mostly lending to small and medium enterprises – will gear up tech-wise.

“We feel as an industry that we’re very prepared for whatever eventuality that may come our way - whether it’s going to be a controlled type of engagements with those engaged in particular types of services,” Mr. Araneta said.

“Obviously the e-wallets, the non-bank operators in this space will have to work very closely with us so that we’ll all be compliant with whatever the BSP puts out,” he added.