“Regulatory Sandbox by BI has purposed on a limited trial place to test Fintech Providers’ technologies, services, products, and/or business models which related into payment system industry.”
Following the integration of technological innovation with financial features, Bank Indonesia (“BI”) has stipulated the framework of regulation, supervision, and observation upon Financial Technology (“Fintech”) as regulated in Bank Indonesia Regulation No. 19/12/PBI/2017 on Financial Technology (“PBI 19/2017”).
One of the scopes regulated in PBI 19/2017 is the introduction of the Regulatory Sandbox. Regulatory Sandbox has proposed on the limited trial place to test Fintech Providers’ technologies, services, products, and/or business models.
BI will observe and assess the system’s readiness and reliability, implementation of consumer protection principle, risk management, prudent principle, and fulfillment of prevailing laws and regulations.
Regulatory Sandbox: Stipulation by BI
According to PBI 19/2017 and Bank Indonesia Regulation No. 22/23/PBI/2020 on Payment System (“PBI 22/2020”), the regulatory sandbox is regarded and propose by the following parties:
| PBI 19/2017 | PBI 22/2020 | Consideration Aspects |
| Fintech Providers (already being registered in BI)Payment System Providers who already present their innovation to the BI | Payment Service ProvidersPayment Infrastructure ProvidersOther parties stipulated by BIInitiative from BI | Fintech, which conducted contain aspects that can be categorized into the payment systemFintech contains innovative aspectsFintech is beneficial or provide benefits to the consumers and/or economyFintech is non-exclusiveFintech is equipped with risk identification and mitigationOther things that considered to be important by BI |
Within the process of being stipulated as parties that have trial in Regulatory Sandbox, the above parties will be requested to present a BI presentation.
The presentation has concerns on a business model and risk management.
Further, BI shall stipulate Fintech Providers as its products, services, technology, and/or business model to be tested in Regulatory Sandbox after BI’s document examination is declared complete, appropriate, and correct.
Business Fields
Based on the above consideration aspects for being stipulated as parties tested in Regulatory Sandbox, the Fintech must contain aspects that can be categorized into the payment system. This can be concluded that regulatory sandbox by BI is only regarded into Fintech with type or related into the payment system. Nevertheless, if regulatory sandbox results that Fintech could be categorized as a non-payment system, BI can submit the status to the other authority.
The Procedure of Regulatory Sandbox
Following the Member of the Board of Governors of Bank Indonesia Regulation No. 19/14/PADG/2017on Limited Trial Place (Regulatory Sandbox) Financial Technology (“PADG 19/2017”), regulatory sandbox procedure is as follow:
- Fintech providers submit trial scenario proposals to BI at last 10 working days from the date of BI’s stipulation.
- BI will review the scenario proposals.
- If accepted by BI, Fintech Providers declare its readiness to run the test scenario.
- BI stipulated the trial scenario for products, services, technology, and/or business model.
- The trial scenario is conducted for 6 months duration at the latest and can be extended for 6 months at the latest.
- During the trial period, Fintech Providers has an obligation for:
- Ensure the implementation of consumer protection principle, risk management, and prudent principle.
- Submit the report of trial implementation, both regularly and incidentally, as requested by BI.
- Complying with the prevailing laws and regulations
- BI will issue 3 categories for trial’s result, which are: Success (must propose the license/approval on a payment system to BI), Not-Success (prohibited to market products, services, technologies, and/or business model), and Other Status (BI could submit the trial’s result to the other authorities).
Read More: An Update on Payment System Regulation in Indonesia
Introducing Sandbox 2.0
On 8 April 2021, BI has officially launched Sandbox 2.0, which is an improvement of the previous Regulatory Sandbox. Sandbox 2.0 has reached the developmental side, which not being observed in the prior sandbox. Sandbox 2.0 is consists of:
- Innovation Lab
Trial for the development of innovations that have not been used or used in the payment system industry on a limited basis.
- Industrial Sandbox
Trial for innovations already being used in the payment system industry needs to be encouraged for widespread purposes.
- Regulatory Sandbox
Trial for innovations upon payment system’s policies or regulations.
Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas e.g. Capital Market & Financial Services.
For further queries and information, contact us:
+62 21 2271 5060 | info@gaffarcolaw.com | www.gaffarcolaw.com
Author: Kristalia Andiani Puteri
Read More: Limitation on the Responsibility of Fintech Providers in Indonesia
