Methods of Payment 

For export transactions, the choice of method of payment depends on two factors: the existing relationship between the exporter (seller) and the importer (buyer) and the mutual agreement on the terms and conditions of the sale.

Cash in Advance

Cash in Advance (C.I.A.) is practiced only to a limited extent due to existing Bangko Sentral ng Pilipinas (BSP) regulations on acquiring foreign currency. Typically, buyers with existing foreign currency accounts with banks operating in the Philippines may consider doing a C.I.A. wherein cash payment is remitted even before the goods are shipped. On the part of the seller, C.I.A. is ideal for goods that are custom-made, such as specialized equipment.

For first-time transactions between the exporter and the importer, or in situations in which the two have not fully established their business relationship, a Letter of Credit (L/C) is a common and secure method of payment. Under this mechanism, the buyer establishes credit with his/her local bank of choice and describes in full detail the terms of the sale (i.e., description of items, price, documentary requirements, etc.). The L/C is opened on account of the buyer in favor of the seller. Essentially, the L/C serves as a demand draft, a promise to pay on the part of the importer with the support of the bank responsible for issuing the payment to the exporter.  

Once the exporter is in full compliance with all the requirements, payment is made within a specified time frame, typically 30 or 60 days or whatever has been agreed upon. Any discrepancies regarding the L/C may result in delays, additional documentary stamp tax or even non-payment. Bank charges apply when securing the L/C. A confirmed irrevocable, documentary L/C “confirmed by a U.S. bank” is recommended.

In cases where the buyer and seller have already established a relatively favorable business relationship, or where mutual trust already exists, other modes of payment may be considered including:

• Documents Against Acceptance (D/A): The exporter extends credit to the importer for a certain period. Terms vary, usually 30 to 60 days after the bill of lading date or the invoice date, depending on what was agreed upon. The seller retains the title documents and forwards them to a collecting bank with instructions to release said documents to the buyer only if the buyer issues a time draft or presents an acceptable bill of exchange.
• Documents against Payment (D/P): The documents transferring the title to the goods are not released to the buyer by the collecting bank unless the bank receives payment from the buyer.
• Open Account (O/A):  When there is a high level of trust and the buyer is of reputable standing with the seller, documents transferring title to the goods are sent directly to the buyer (instead of the collecting bank, as in the case of D/A) without guarantee of payment.  The buyer remits payment upon maturity; terms vary from 30 days to 180 days, depending on the agreement.  Subsidiaries of multinational companies operating in the Philippines (especially those in the oil and pharmaceutical sectors) are prime users of O/A.
• Direct Remittance: As with O/A significant mutual trust is required. Instead of a term transaction, the seller requires the buyer to pay immediately upon receipt of the document transferring the title to the goods.

Credit Rating Agency

Philippine Rating Services Corporation, or PhilRatings, provides credit ratings on Philippine corporate and debt issues (i.e., commercial papers, bonds, or asset-backed securities). The company is accredited as a domestic credit rating agency (CRA) by the BSP and the Philippine Securities and Exchange Commission (SEC). Press releases on new and monitoring ratings are regularly posted on the PhilRatings website.  Annual subscriptions to PhilRatings’ regular publications are also available.

Collection Agencies

In case of non-payment, U.S. firms may consider using Philippine-based collection agencies, typically on a “no collect, no pay” basis. Standard collection periods may range from 30 to 120 days, especially for accounts outside Metro Manila. Collection agencies usually issue a lawyer-signed demand letter. Service fees typically range from 20 percent to 40 percent of the recovered amount. Legal escalation is possible but may entail additional costs and time. Ensure the agency complies with Philippine data privacy and fair collection practices.

Primary credit or charge cards used

Most merchants in the Philippines accept Visa and MasterCard. American Express is accepted at many hotels and larger retailers, primarily in urban centers. Diners Club and Discover have more limited acceptance. For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide. While credit cards are less commonly used in B2B trade transactions, digital payment platforms (e.g., GCash, Maya) are increasingly popular for retail transactions, although not yet standard for international trade.

Banking Systems  

Since 1997, the Philippine Central Bank (Bangko Sentral ng Pilipinas or BSP) has implemented various banking system reforms to enhance governance standards and risk management systems, tighten disclosure and reporting requirements, increase minimum capitalization levels, and improve compliance frameworks and systemic oversight. Beginning in 2001, the BSP adopted the international risk-based capital adequacy and disclosure standards (i.e., the Basel framework). Commercial banks and their subsidiaries have been required to adopt in phases the enhanced Basel III standards since 2014, while simpler standards (“Basel 1.5”) apply to thrift, rural, and cooperative banks. The BSP has similarly implemented the international framework for dealing with domestic systemically important banks (D-SIBs; basically, banks considered too big to fail), requiring full compliance to higher capital buffer requirements by January 1, 2019.   

The New Central Bank Act or the amended BSP charter was signed into law in February 2019, bolstering the monetary authority’s capability to promote price and financial stability. The amendments include the increase in capitalization, stronger supervisory and enforcement powers, enhancement of financial system liquidity management tools, including the restoration of BSP’s authority to issue its own debt papers, and allowing the orderly resolution of troubled banks. 

Consistent with the Philippines’ commitment under the Paris Agreement to reduce by 75 percent its carbon emission by 2030, the BSP has adopted a phased approach to “Sustainable Central Banking,” which aims to advocate green and sustainable policies and practices.  BSP regulations promoting environment, social, and governance (ESG) principles include the following:  1) a Sustainable Finance Framework, which emphasized the role of the corporate leadership in adopting sustainability principles; 2) an Environment and Social Risk Management Framework, which mandates the incorporation of environmental and social risks to credit and the operational risk exposure of banks; and 3) Guidelines on the Integration of Sustainability Principles in Investment Activities.  

The share of retail digital payment transactions in the Philippines reached 52.3 percent in 2023, surpassing BSP’s Digital Transformation Roadmap goal of converting at least 50 percent of payments into digital by 2023. The BSP also aims to expand digital banking, with the reopening of application window for licenses in December 2024 after a three-year moratorium. Six digital banks operate in the Philippines; up to four more licenses can be issued under the new rule. Additionally, BSP issued the Open Finance Framework in 2021 and launched the Open Finance PH Pilot in 2023, which encourages consent-driven data portability, interoperability, and collaborative partnerships between BSP-supervised financial institutions and fintech players.  

In 2019, the BSP released the regulatory guidelines for Islamic Banks, in accordance with an Islamic Banking Law.  The new rules outlined the licensing framework and discussed Sharia governance principles for the country’s sole existing player, as well as other potential new entrants.  In 2024, BSP licensed two new Islamic Banking Units (IBU), while encouraging more players to leverage the potential of Islamic finance in the Philippines.   

Twelve foreign banks have been operating in the Philippines since the full liberalization of the banking sector in 2014.  As of May 2025, there are 26 foreign banks operating in the Philippines, 24 foreign branches and two subsidiaries.  Most foreign banks in the Philippines are based in the Asia-Pacific region, notably Taiwan and the Republic of Korea.  The BSP, under the ASEAN Banking Integration Framework, is targeting agreements with Malaysia, Indonesia, and Thailand for the entry of qualified ASEAN Banks into the Philippine market.  

As of May 2025, the banking sector consisted of 44 universal and commercial banks, 41 thrift banks, and 381 rural and cooperative banks with combined resources of approximately $610 billion. Although fewer in number, universal and commercial banks dominate the banking sector and account for about 94 percent of the banking system’s total resources. Twenty-two banks (referred to as universal banks) have an expanded commercial banking license, which allows them to perform the functions of an investment house (such as securities underwriting) and invest in non-allied undertakings, in addition to regular commercial banking activities.  

The largest sectors with outstanding loans as of the end of December 2024 were real estate activities (20.2 percent), wholesale and retail trade (11.5 percent), household/consumers (12.1 percent), manufacturing (10.4 percent), and the electricity and gas sector (11.1 percent). Outstanding loans from banks’ foreign currency deposit units stood at about $15.8 billion as of end of December 2024, mainly to resident borrowers such as exporters (15.9 percent), towing, tanker, and trucking companies (14.1 percent), and power generation companies (12.2 percent).

The BSP is legally mandated to examine supervised financial institutions annually. Special examinations require approval from at least five of the seven Monetary Board members. Banks must have their financial statements audited by BSP-accredited external auditors, who are obligated to report any adverse findings or material concerns. To ensure audit independence and transparency, audit firms must be rotated at least every five years. Additionally, bank senior management must disclose to the BSP any significant risks, issues, or management changes.

The deposit insurance scheme – administered by the Philippine Deposit Insurance Corporation (PDIC) – is patterned after the U.S. Federal Deposit Insurance Corporation (FDIC).  PDIC has a permanent insurance fund (PIF) of about $60 million,  augmented by premiums paid by member banks (currently one-fifth of 1 percent per annum of the deposit base). On March 15, 2025, PDIC’s maximum deposit insurance coverage (MDIC) per depositor was raised to approximately $18,000. PDIC is authorized to adjust MDIC to an amount indexed to inflation or in consideration of other economic factors.  Amendments to the PDIC charter have enhanced the PDIC’s receivership, liquidation, and resolution powers. Among others, the 2004-2016 amendments allow earlier intervention in problem banks before closure; simplify the payout of insurance coverage to affected depositors; and provide a more seamless transition from closure to liquidation.  
More detailed regulations governing the operations of banks and other BSP-supervised financial institutions are available at the BSP website. 

Foreign Exchange Controls

The BSP allows Philippine residents and non-residents to purchase foreign exchange (FX) from authorized agent banks (AABs), banks’ subsidiary/affiliate foreign exchange corporations (AAB-forex corps), non-bank entities operating as foreign exchange dealers (FXDs), and/or money changers (MCs) to fund legitimate foreign exchange obligations, subject to the provision of information and/or documents. The sale of FX by AABs and AAB-forex corps is governed by the Manual of Regulations on Foreign Exchange Transactions. 

FX purchases from AABs and AAB-forex corps for trade and non-trade current account transactions (such as travel, medical and educational expenses, royalties, copyright, patent, franchise, and licensing fees) of up to $500,000 for individuals and $1,000,000 for corporate/other entities or their equivalent, in other foreign currencies require only the submission of a BSP-prescribed application form to purchase FX from the foreign-exchange selling institution; amounts in excess require the submission of supporting documents. 

The BSP allows submission of supporting documents through electronic means for: a) the registration of private sector foreign loans without public sector guarantee; b) registration of inward investments; c) sale of foreign currency by banks covering FX transactions. 

The BSP does not require imports to be registered under any mode of payment but does require banks to report such transactions to the BSP prior to purchase of FX for payment.  FX purchases from AABs and AAB-forex corps for import payments may be remitted directly by the FX-selling institution to the non-resident beneficiary’s account or credited to the importer’s foreign currency deposit account (with the same or different AAB) for eventual remittance by the depository AAB to the non-resident beneficiary. 

Although there are some exceptions, public sector foreign/foreign currency loans generally require prior BSP approval pursuant to existing laws, including the 1987 Philippine Constitution.  Loan proceeds should be deposited with the BSP pending utilization. 

Government-guaranteed foreign/foreign currency borrowings by the private sector also require prior BSP approval. Purely private sector loans do not require approval but must be reported to the BSP. Private sector borrowing should be registered with the BSP and is subject to BSP approval if FX for debt servicing is sourced from AABs and/or AAB-forex corps. 

Registration of foreign investments either with the BSP or custodian banks is optional, unless the foreign exchange which will be used to service the repatriation of capital and/or the remittance of related earnings sourced from AABs and AAB-forex corps. Registration can be filed with the BSP within a one-year prescriptive period, free of charge. 

FX purchases from FXDs/MCs for non-trade current account purposes are allowed up to $10,000 or the equivalent, without additional supporting documents, other than a BSP-prescribed application form to purchase foreign currency, but not to exceed $50,000 per month per customer.  FX purchases from FXDs/MCs for non-trade current account purposes require submission of a BSP-prescribed application form and supporting documents, regardless of amount. 

Since 2017, the BSP has implemented 13 rounds of foreign exchange reforms to ensure that the country’s regulatory framework remains appropriate for the needs of an expanding economy. Foreign exchange rules were broadly eased over the years to ensure ample FX liquidity, while maintaining timely prudential and safeguard measures (e.g., documentary/reportorial requirements).  Recent measures included increasing the limit on banks’ net open foreign exchange position, amendments for FCDU regulations, expanding entities authorized to conduct FX transactions, increasing penalties of misreporting of FX transactions, and streamlining procedures and documentary requirements – including allowing the electronic issuance of BSP documents and submission of declaration forms and documentary and reportorial requirements, among others, and lifting of processing fees for some transactions.  

In April 2025, BSP also amended regulations to broaden access to hedging instruments and deepen access to the domestic capital market.  One of the significant reforms included expanding the list of allowable FX hedging instruments to include non-deliverable swaps, non-deliverable cross currency swaps, and FX options. New regulations are available at Regulations - BSP Issuances

Additional information on foreign exchange and remittance policies can be found in Parts 1 and 6 of the Investment Climate Statement in this Country Commercial Guide. More detailed information is available at Foreign Exchange Regulations.
Contact:  
International Operations Department - Bangko Sentral ng Pilipinas  
E-mail: iod-ipds@bsp.gov.ph

U.S. Banks and Local Correspondent Banks

As of December 2025, the commercial banking system includes three U.S. foreign-branch banks: Bank of America, Citibank, and JPMorgan Chase. The Bank of New York Mellon and Wells Fargo closed their representative offices in the Philippines in April 2023 and June 2021, respectively.  Reflecting a long history of economic and political ties, all commercial banks in the Philippines have correspondent U.S. banking relationships.  The best way for a firm to determine whether its U.S. bank has a correspondent bank in the Philippines is by checking with the U.S. bank. 

Commercial Banks     

Address and Contact Person 

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.