An Update on Payment System Regulation in Indonesia

“PBI 23/2020 has amended Payment System regulation, which restructuring the regulatory framework for Payment System, including reclassifying the activities of the Payment System operator.”

To accommodate digitalization and innovation in the Payment System (“PS”) sector, Bank Indonesia (“BI”) has issued Regulation of Bank Indonesia No. 22/23/PBI/2020 on Payment System (“PBI 23/2020”) which prevail on 1 July 2021. PBI 23/2020 has reformed PS regulation which restructuring the regulatory framework for PS, including reclassifying the activities of PS operator. PBI 23/2020 has changed the regulatory approach of PS implementation from an institutional approach to activity and risk-based approach.

Classification of Payment Service Provider (“Penyedia Jasa Pembayaran” or “PJP”) and Payment System Infrastructure Operator (“Penyelenggara Infrastruktur Sistem Pembayaran” or “PIP”).

PBI 23/2020 has classified PJP to the following category:

  1. Account Information Services, which provides information on sources of funds for payment initiation based on consumer consent .
  2. Payment Initiation and/or Acquiring Services, which includes forwarding payment transactions.
  3. Account Issuance Services, which includes payment authorization.
  4. Remittance Services, which includes acceptance and execution of orders to transfer funds whose source of funds do not originate from an account administered by the remittance service provider.

Any parties that act as PJP is obliged to obtain a license from BI.

Meanwhile, the PIP has classified into the following category:

  1. Clearance, which includes reconciling activities, confirm and calculate PIP member’s financial rights and obligations before the settlement process.
  2. Settlement for the interest of PIP members, which includes the final and binding settlement through debiting and crediting of the parties’ account upon financial rights and obligations of PIP members based on clearance result.

Any parties that act as PIP is obliged to obtain stipulation from BI.

Furthermore, PBI 23/2020 also classified PJP and PIP into 3 (three) categories: Systemic Payment System Operator, Critical Payment System Operator, and General Payment System Operator.

Shareholders Compositions of PJP and PIP

The shareholders compositions of PJP and PIP can be found in the following table:

PJPPIP
At least 15% of shares must be owned by Indonesian citizen and/or Indonesian legal entity. For a public company, calculation of shareholders composition is conducted only for shareholders ownership with a percentage of more than 5%.  At least 51% of shareholders composition with voting right, right to nominate Directors and/or commissioners, and/or veto right, must be owned by Indonesian citizen and/or Indonesian legal entity.At least 80% of shares must be owned by Indonesian citizen and/or Indonesian legal entity. For a public company, calculation of shareholders composition is conducted only for shareholders ownership with a percentage of more than 5%.  At least 80% of shareholders composition with voting right, right to nominate Directors and/or commissioners, and/or veto right, must be owned by Indonesian citizen and/or Indonesian legal entity.

Obligations of PJP and PIP in Data Processing

In processing data and/or information related to the payment system, PJP, PIP, and/or parties that cooperated with PJP and PIP are obliged to:

  1. Implement personal data protection principle including fulfilling approval of consumer -aspect upon the utilization of its personal data.
  2. Fulfil data processing mechanism and/or information related to PS, which stipulated by BI, including process mechanism through data infrastructure and PS infrastructure.
  3. Fulfil a mechanism third-party data infrastructure utilization, which stipulated by BI.
  4. Implement cyber risk management in PS operational, including information system security standard.
  5. Fulfil the prevailing laws and regulations.

Status of License which Already Obtained by Payment System Service Operator (“Penyedia Jasa Sistem Pembayaran” or “PJSP”)

As for license obtained by PJSP before the promulgated of PBI 23/2020, BI will conduct the following steps as follow:

  1. BI conducting the assessment to PJSP that already obtained the license, which comprises activity reclassification and fulfilment of requirement based on PBI 23/2020.
  2. Following the BI assessment result, the licensed PJSP have 2 (two) years to fulfil all the requirements. BI will convert the current license into a PJP license or PIP stipulation or revoke the said license after the settlement of rights and obligations.

Author: Kristalia Andiani Puteri

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