Philippines Shuts 8,000 Merchant Accounts Over Gambling

Authorities in the Philippines have closed more than 8,000 merchant accounts after discovering that they were allegedly being used to process payments for unregistered and unlicensed online casino operators.

The findings came from the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, according to Bloomberg. Authorities identified businesses such as beauty salons, bakeries and small stores whose accounts were being used to handle transactions associated with illegal online gambling.

While the accounts appeared to be connected to ordinary businesses, government surveillance revealed unusual payment activity. Some were receiving thousands of small transactions late at night and during the early hours, when the businesses would normally be closed.

Mamerto Tangonan, deputy governor of the BSP, said the central bank aims to protect consumers from internet fraud, criminal activity and money laundering.

He noted that digitalisation cannot continue to grow if consumers are losing money through theft and scams. The BSP’s measures form part of a wider effort to improve safety and trust in the country’s digital payment system.

Late-night payments trigger scrutiny

According to Bloomberg, authorities identified merchant accounts receiving thousands of payments worth as little as PHP50.00, or US$0.80, after midnight.

The transactions continued into the early morning and involved accounts associated with businesses including small stores, bakeries and beauty salons, which would typically be closed at those hours.

These unusual transaction patterns drew the attention of authorities during their surveillance. Further investigation determined that the payments were online casino bets, according to Tangonan.

The findings demonstrated that merchant accounts appearing to belong to legitimate consumer-facing businesses could instead be used to process payments for illegal online gambling platforms.

Authorities have not disclosed additional details about the individual merchants involved or the overall value of transactions handled through the accounts that were closed.

Nevertheless, the closure of more than 8,000 merchant accounts highlights the scale of the payment-channel problem identified by the BSP.

PAGCOR cooperates with BSP

Alejandro Tengco, chairman and chief executive of the Philippine Amusement and Gaming Corp (PAGCOR), said the regulator knew that numerous businesses with seemingly harmless names were actually unregistered online casinos.

Tengco said PAGCOR does not directly control these businesses but confirmed that the gaming regulator is cooperating with the BSP to address the issue.

The work between PAGCOR and the central bank is focused on tackling payment activity associated with unregistered and unlicensed online casino operators.

Last month, Tengco also revealed that PAGCOR was developing an application intended to help customers access legal online gambling websites. The application was expected to come into existence soon.

The planned application is designed to help users identify legal online gaming platforms while authorities continue to address payment channels connected to unauthorised operators.

Payment platforms face proposed new requirements

The comments from BSP and PAGCOR officials followed the central bank’s release of a draft document that would require payment service providers to strengthen the screening of their merchant partners.

Under the proposed rules, payment platforms would have to gather additional information about merchants before connecting them to their systems, including details about business owners and applicable licences.

The BSP also plans for payment platforms to establish databases containing legitimate merchants. These databases could help identify approved businesses and lower the risk of accounts being used for illegal activities.

Tangonan said payment businesses could have their payment licences revoked if they repeatedly breach the rules. He added that payment providers are accountable when illegal activity occurs and they are unable to prevent it.