“Fintech Providers in Indonesia have responsibilities according to the type of business and its regulation.”
Within the development of the Financial Technology (“Fintech”) industry in Indonesia, the Fintech Providers had dealt with many platform’s problems faced by the consumers. The problems can be in the platform’s technical issues, investment losses, the event of default, and financial crime modes (skimming, phishing, and vishing). Following the platform’s problems that have been mentioned above, the responsibility of Fintech Providers had been stipulated both in Regulation of Bank Indonesia (“BI”) and Financial Services Authority (“OJK”). The Fintech Providers are obligated to fulfill and implement the consumer protection principle to avoid platform problems. Nevertheless, Fintech Providers have responsibility limitation upon platform’s problems which undergo by the consumers’ negligent.
Fintech Providers: Categorization
Fintech industry in Indonesia is supervised under the authorization of BI and OJK. Bank Indonesia Regulation No. 19/12/PBI/2017 on Financial Technology (“PBI 19/2017”) has issued by BI to regulate, supervise, and monitor the outgrowth of Fintech, specifically in practice, Fintech, which related to the payment system. The other regulation that related to Fintech has also been issued by BI, which can be found in Regulation No. 20/6/PBI/2018 on Electronic Money (“PBI 20/2018”) and Regulation No. 18/40/PBI/2016 on Payment Transaction Processing Operations (“PBI 18/2016”) which consists the stipulation of payment gateway and electronic wallet.
Concurrently with BI, OJK has issued Regulation No. 77/POJK/01/2016 on Lending Service with Information Technology Basis or Fintech Lending (“POJK 77/2016”), OJK Regulation No. 13/POJK/02/2018 on Financial Digital Innovation (“POJK 13/2018”), and OJK Regulation No. 57/POJK.04/2020 on Securities Offering through Crowdfunding Services with Information Technology Basis (“POJK 57/2020”).
The details of Fintech categorization can be found in the following table:
| BI | Financial Technology which can be in the form of: 1. Payment System; 2. Market Support (e.g. Digital Sign); 3. Investment and Risk Management; 4. Loan, Financing, and Capital Providing; and 5. Other Financial Services. Must fulfill the following criteria: 1. Innovative; 2. Affected to financial services which already exist; 3. Provide benefits to the community; 4. Can be used widely; and 5. Other criteria stipulated by BI. |
| BI | E-Money |
| BI | E-Wallet |
| BI | Payment Gateway |
| OJK | Financial Digital Innovation, which categorized in the following cluster: a. Aggregator; b. Blockchain-Based; c. Claim Service Handling; d. Credit Scoring; e. E-KYC; f. Financial Planner g. Financing Agent; h. Funding Agent; i. Insurance Broker Marketplace; j. Insurtech; k. Online Distress Solution; l. Project Financing; m. Property Investment Management; n. RegTech – PEP; o. Tax & Accounting; and p. Verification Technology. |
| OJK | Fintech Lending (Peer to Peer Lending) |
| OJK | Securities Crowdfunding |
Fintech Providers: Responsibility
In general, Fintech Providers registered under BI must implement the consumer protection principle according to BI Regulation No. 22/20/PBI/2020 on Bank Indonesian Consumer Protection (“PBI 22/2020”). One of its principles, Fintech Providers must provide consumer’s assets, which may arise from the negligence of management and/or staff (not caused by the consumer’s negligent). Further, the responsibility of Fintech Providers is stipulated specifically according to the types of business. For example, the e-wallet provider has the responsibility to provide a refund mechanism to accommodate payment cancellation.
As for Fintech Providers registered under OJK, the regulation has prohibited the Fintech Providers from being exposed to risks, apart from being obliged to implement the consumer protection principle based on Regulation No. 1/POJK/07/2013 and its amendments, OJK has stipulated the Fintech Providers as an intermediary platform between the interest parties.
Therefore, if consumers had experience losses caused by the consumer’s negligent or market mechanism, the Fintech Providers do not have responsibility for the said losses. However, the responsibility is also stipulated specifically according to the types of business. For example, the Fintech Lending is not responsible for the lender’s losses caused by the borrower’s default to repay the loan. Nevertheless, the Fintech Lending has obligated to have risk mitigation for collection, to help lender obtain its repayment.
Fintech Providers: Prohibition
The prohibition of Fintech Provider is stipulated according to the types of business and its regulation. For example, the Fintech providers based on PBI 19/2017 is prohibited from conducting payment system activities with virtual currency. Moreover, Fintech Lending Provider based on POJK 77/2016 is prohibited from acting as lender or borrower, issue certificate of bond, provide guarantee upon the party’s obligation fulfillment, and provide data and/or information of the users to the third party.
Author: Kristalia Andiani Puteri
Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas e.g. Capital Market & Financial Services.
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