MANILA - The Bangko Sentral ng Pilipinas on Friday ordered social media app Lyka to suspend operations as an "Operator of Payment System" (OPS) and to register with the regulator.

Lyka, which operates in the Philippines and is backed by a Hong-Kong based company, allows users to purchase, exchange and use Gift cards in electronic mode or GEMs as payment for goods and services, the BSP said in a statement.

"The Bangko Sentral ng Pilipinas (BSP) has issued an order to an Operator of Payment System (OPS) to suspend its operation as an OPS and has invited said entity to register with the BSP as provided under Republic Act No. 11127 or The National Payment Systems Act (NPSA)," it said.

"The Monetary Board has ascertained that these activities make Lyka an OPS and is thus required to register with the BSP, which is needed before it is allowed to continue with its OPS activities," the BSP said.

An OPS could be a cash-in service provider, bills payment, payment gateway, payment facilitator or merchant acquirer that enables sellers of goods and services to accept payments in cash or digital form, it added.

Celebrities, vloggers and other personalities have been promoting the social media app.

Lyka operators have expressed their willingness to register with the BSP as an OPS, the central bank said.

All OPS entities are required to comply with the requirement under the National Payment Systems Act and BSP Circular No. 1049, which details rules for the registration of OPS, the BSP said.

Proper registration allows the BSP to have "oversight of the payment system it operates to ensure that it functions safely, efficiently and reliably," it said.

This will also ensure consumer protection and financial stability, the BSP said.

Circular No. 1049 also mandates that those operating without registration will be directed to comply with the registration requirement.

Firms that fail to do so "may be ordered to stop operations until immediate action is taken to register with the BSP," it said.

Moving forward, the BSP urged the public to transact with the BSP-registered operator listed on its website.

Digital financial transactions have surged during the COVID-19 pandemic as Filipinos sought ways to continue daily tasks without leaving their homes.

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