Canada    FinTech Guide    Chapter 1    Indonesia


1. Payment Services / Mobile Payment
Indonesia  Indonesia

Bank Indonesia has an ambition to create a system that integrates all utilization of electronic money and payment systems from various banks or issuers. Bank Indonesia also intends to unify the ATM machines for all banks. Therefore it is expected that Bank Indonesia will keep formulating regulations to achieve the said intention.



Legal Affairs


If a fintech company wants to provide payment services whereby it can offer solutions to easily integrate several payment services in online shops, it shall obtain the license as the payment gateway operator as regulated under Bank Indonesia Regulation No.18/40/PBI/2016 regarding Implementation of Payment Transaction Processing (“PBI No. 18/2016”) and its implementing regulations. To be able to do so, the fintech company shall fulfill the eligible aspects by obtaining the following required documents:


  • documents regarding the legality aspect and the company profile
  • documents evidencing the preparation of the legal equipment, i.e. final agreement in Indonesian language.
  • Evidence of operational preparation, i.e. organization structure, preparation of human resources, plan and/or evidence equipment as the payment gateway operator, hardware and software, profile documents, certification (if any), result of user acceptance test of software and hardware, data center and disaster recovery center.
  • Documents with regard to the safety and the control of system
  • Business analytical result document for the next 5 (five) years indicating the eligibility and continuity business potential over the payment gateway activity, i.e. market potential, business competition analytical, fee structure, cooperation plan, estimated income.
  • Any documents evidencing the risk management preparation at least including operational risk, legal risk, liquidity risk and reputation risk.
  • Documents with regard to consumer protection
Other than the obligation to have license as mentioned above, please be informed under BI Regulation No. 19/12/PBI/2017 regarding the Implementation of Financial Technology and its implementing regulations (“BI Regulations on Fintech”), financial technology operator which (i) has or will conduct activity that fulfil criteria as “financial technology” operator, or (ii) under the supervision of other authority that conducts financial technology in payment system activity, shall register itself to BI. The activity of financial technology operator includes (i) payment system, (ii) market supporter, (iii) investment management and risk management, (iv) loan, financing and capital provision; and (v) other financial services.

Payment system in point (i) above includes activity of authorization, clearing, final settlement and payment activities. For example, the use of block chain or distributed ledger for fund transfers, money electronic, e-wallet and mobile payment.

To be considered as “Financial technology”, such business model shall fulfill the following criteria:

  • innovative;
  • give impact to the existing product, service, technology and/or financial business model;
  • give benefits to society;
  • can be widely used; and
  • other criteria as determined by BI.

This registration requirement will be exempted for (i) payment system service operator that has obtained license from BI and/or (ii) other financial technology operator that operates under the authority of any institutions other than BI and does not involve in payment system fields. Nonetheless, the payment system service operator in category (i) must still submit the information to BI regarding product, service, technology and/or new business model that fulfills criteria as financial technology.

The financial technology provider shall be in the form of business entity, or if it conducts the activity as payment system service operator, it must be in the form of Indonesian legal entity. The registration shall be made by submitting the required documents through online system of BI, such as the entity’s deed of establishment, information of ownership and management board composition, company’s overview and written brief explanation on the product, service, technology provided and the ongoing or planned business model. After passing the assessment process conducted by BI, the financial technology provider will be listed in the List of Financial Technology Operator prepared by BI and and published in the official website of BI.

Following the registration, BI opens the platform for financial technology operator to ensure that its product, service, technology and/or business model has fulfilled the criteria as “financial technology” through the “Regulatory Sandbox”. Through this method, BI will determine financial technology operator to be tested in the Regulatory Sandbox, by considering:

  • the financial technology operator has been registered in BI;
  • the financial technology that will be applied contains elements to be categorized as payment system;
  • the financial technology contains the innovative elements;
  • the financial technology can give benefit to consumer and/or economy;
  • the financial technology shall be non-exclusive;
  • the financial technology can be used in wide-scale;
  • the financial technology has been equipped with risk identification and mitigation; and
  • other matters deemed important by BI.

In order to assessed the foregoing criteria, the financial technology operator must (i) conduct presentation which at least elaborate on business model and risk management and (ii) submit the complete required documents as requested by BI. The information regarding presentation will be notified through e-mail and the document in point (ii) shall be submitted through online or if the online system has yet to be ready, through letter to BI. The documents are various, such as data and information regarding the financial technology operator and its product, service, technology and/or business model, financial statements, evidence of operational readiness, standard operational procedures and technology security system documents. BI further assesses the completeness and correctness of the submitted documents, and may request for additional documents to be completed at the latest 5 business days after BI’s request. Based on BI’s assessment on the presentation and documents, BI will give the stipulation for such operator to be tested in Regulatory Sandbox.

The financial technology operator must submit the scenario proposal of a trial product, service, technology, and/or business model to BI within a maximum period of 10 business days from the date of stipulation. The scenario proposal will include at least, (i) a trial product, service, technology, and/or business model, (ii) time period required to conduct the trial, (iii) target to be achieved, (iv) territorial constraints, limits on consumer numbers, and other restrictions; and (v) the reporting mechanism for the implementation of trials in the Regulatory Sandbox. If following its assessment, BI approves on the scenario proposal submitted by the financial technology operator, the financial technology operator shall state its ability to run an approved trial scenario by signing a statement letter. The period of Regulatory Sandbox shall be conducted at the latest 6 months as of the BI’s approval, and can be extended 1 times for a maximum 6 months. During this period, the financial technology operator shall ensure the implementation of proper consumer protection, risk management and prudential principle, report the trial scenario progress and comply with the regulations.

Following the end of Regulatory Sandbox period, BI will determine the trial result, either (i) effective, (ii) failed, or (iii) other status determined by BI. If BI determines that the trial scenario constitutes as financial technology in payment system category, then it cannot market its product, service, technology and/or business model without obtaining BI’s license for payment transaction processing implementation. Without prejudice to the trial result and while carrying out the trial in Regulatory Sandbox, the financial technology operator can submit the license for payment transaction processing implementation to BI. If BI issues the license, then the financial technology operator can market the product, service, technology and/or business model after obtaining the effective statement from BI upon the trial result. Please be noted that the financial technology operator that intends to obtain BI’s license for payment transaction processing implementation shall be in the form of Indonesian legal entity. If the product, service, technology and/or business model constitutes as other category than payment system category, then BI will submit the trial result to the relevant authority.


Economic Conditions


With the total e-commerce transaction reaching almost more than 130 trillion Rupiah in 2014, the market for payment services in Indonesia has grown dramatically.

To the best of our knowledge, the biggest payment service provider according to the market shares in Indonesia is Doku. Currently DOKU provides digital payment services for over 20,000 merchants with direct connection to 15 major banks in In-donesia. Some fintechs in Indonesia to be aware of in this business includes Veritrans, DoKu, Kartuku, iPay88, Easypay and MCpayment.



Contributing Authors

Armand Yapsunto Muharamsyah & Partners (AYMP)

Arie Armand
Jakarta, Indonesia


Richard Yapsunto
Jakarta, Indonesia

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Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018