Sep. 3--FINANCE companies will start tapping the real-time gross settlement system of the Bangko Sentral ng Pilipinas (BSP) allowing them to enjoy online transactions.

The BSP on Wednesday signed a memorandum of agreement (MOA) with the Philippine Finance Association (PFA), a group of consumer finance companies engaged in credit cards, automotive sales and leasing, for the use of the Philippine Payments and Settlements System (PhilPaSS).

Protacio Bantayan, PFA treasurer, said the group's members would improve the efficiency and security of their payment transfers and would allow electronic transactions with the BSP's computerized accounting system.

He said finance companies registered with the Securities and Exchange Commission number 593, with combined assets of P115 billion and capital of P27.6 billion.

Bantayan said the finance companies are scattered in the countryside, catering to individuals and small and medium enterprises (SMEs).

Only 36 of the total number of finance companies cater to large firms. Banks with consumer lending businesses are also members of PFA.

BSP Deputy Governor Armando Suratos said the PFA members, which are primarily engaged in consumer financing, would enjoy faster, highly automated and more secure processing of inter-bank fund transfers with their counter parties under PhilPass.

"They will be able to transact business on government securities and foreign exchange trades, participate in the BSP's open market operations on an online real time basis and efficiently manage their funds electronically," he said.

Since most of the PFA members are engaged in consumer financing, Suratos said these nonbanks with quasi-banking functions (NBQBs) could also encourage their clients and customers to settle and pay their dues and obligations via PhilPass through their depository banks for online, real time credits direct to NBQBs' demand deposit accounts with the BSP.

The average daily transaction under PhilPass amounted to P768 billion as of July.

Transactions that are settled in PhilPass through demand deposit accounts maintained with the BSP include high value inter-bank lending and borrowing, sale and purchase of government securities, peso-leg settlement of foreign exchange sale and purchase, results of check clearing operations, Megalink network fund transfers and payments and e-rediscounting.

Besides PFA, the other PhilPass participants are the Investment Houses Association of the Philippines (IHAP), Bankers Association of the Philippines (BAP), Rural Banks Association of the Philippines (RBAP), and Chamber of Thrift Banks (CTB).

Bella Santos, BSP Payment and Settlement Office director, said the average fee transaction per day reached P500,000.

PhilPass is charging P5 to P400 per transaction for transactions ranging from P100 to P4 million.

She said PhilPass aims to sign a MOA with the Association of Bank Remittance Officers Inc. (ABROI) to encourage banks to lower remittance fees.

Some local banks are still hesitant to participate in the PhilPass for the transfer of overseas Filipino worker (OFW) remittances, as doing so would cut their fee-based incomes.

The country's economic growth is supported mainly by private consumption, which is in turn fueled by funds sent home by OFWs. Remittances are expected to post flat growth this year from $16.4 billion last year.

In August last year, the BSP abolished annual license fees of P20,000 and monthly connectivity fees of P30,000 for third party system providers to encourage more financial entities to participate in PhilPass.

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