The Bangko Sentral ng Pilipinas is preparing stricter controls for payment service providers after authorities identified thousands of merchant accounts allegedly connected to illegal online casino transactions.

According to Bloomberg, the Philippine central bank’s surveillance found businesses that appeared on paper to be ordinary merchants while processing large volumes of small payments late at night. Authorities eventually determined that some of those transactions represented wagers placed with online casinos.

Beauty salons, bakeries and small neighborhood stores were among the business identities linked to the activity. More than 8,000 merchant accounts have since been closed over alleged illegal transactions.

BSP Deputy Governor Mamerto Tangonan said payment providers need to conduct stronger checks on the businesses using their platforms.

“We want to protect consumers from online fraud, illegal activities and also from money launderers,” Tangonan said. “You cannot expand digitalization if people’s money is being stolen or they’re being scammed”.

Small Payments Raised Concerns

The central bank became concerned after monitoring showed that some merchants were receiving thousands of transactions after midnight and into the early morning. Individual payments could be as low as PHP50, equivalent to about $0.80.

The transaction patterns appeared unusual for the types of businesses listed on the merchant accounts. Further examination showed that payments were being directed toward online casino betting activity.

Philippine Amusement and Gaming Corp. Chairman and CEO Alejandro Tengco said the regulator knows that some businesses with ordinary-sounding names are actually unregistered online casino operators.

“Unfortunately, we don’t have control over that,” Tengco said.

PAGCOR is working with the BSP on the issue. The gaming regulator is also preparing an app designed to help users identify legitimate online gaming sites, with its launch expected before the end of 2026.

The findings have also drawn attention to the role of merchant aggregators. These intermediaries connect businesses with payment channels and can help payment companies expand into areas where smaller merchants may otherwise have limited access to formal financial services.

The BSP’s proposed changes would require clearer visibility over the merchants receiving payments and the parties that ultimately own them.

BSP Proposes Stronger Merchant Checks

The central bank has released a draft document proposing changes to payment-system regulations. Payment service providers would have to collect additional merchant information, including ownership details and relevant licenses.

The BSP also wants providers to maintain databases of legitimate merchants.

Under the proposal, payment arrangements that make it difficult to identify the actual merchant, beneficiary or settlement account would face tighter restrictions. Casino and wagering businesses, including online operators, would be expected to use direct merchant arrangements instead of structures involving layers of intermediaries.

Those businesses would also face enhanced due diligence and monitoring requirements.

Repeated failures to meet the rules could ultimately put a provider’s payment license at risk.

“If there are illegal activities and you’re not able to stop it, then you are accountable,” Tangonan said.

The proposal follows earlier BSP action involving digital gambling payments. In 2025, the central bank ordered e-wallet providers to remove direct links to licensed online gaming operators.

PAGCOR has since said that the proportion of Philippine online gambling taking place through licensed operators stands at about 50%. Industry reporting has cited a figure of as much as 75% before the removal of direct e-wallet links.

Payment Companies Back Tighter Controls

Major payment companies and industry representatives have voiced support for stronger safeguards.

Maya said it supports measures that “strengthen the integrity, safety and trustworthiness of the digital payments ecosystem,” while noting that it already operates merchant onboarding, due diligence and monitoring procedures.

GCash also expressed support for the BSP initiative.

“We remain committed to working closely with regulators and industry partners toward a safer, more trusted, and inclusive digital economy for all Filipinos,” the company said.

The EMoney Association of the Philippines said it supports the central bank’s efforts and is reviewing the proposed circular.

“It is important that there is accountability from the industry to ensure that we have a safe digital ecosystem for the market,” an association representative said.

The review comes as digital payments account for a growing share of retail transactions in the Philippines. Electronic payments represented approximately two-thirds of retail transactions in 2025, compared with 57% in 2024. Their share stood at around 10% in 2018, when the BSP began reporting the figures.

Tangonan acknowledged that stronger merchant checks could temporarily affect the speed at which digital payment services expand, while arguing that stronger controls would support longer-term development.

“You shouldn’t sacrifice safety for growth,” he said. “There’s no trade-off there.”