Author: Kristalia Andiani Puteri with Daffa Zidan Alfrianza Sukarni
“Bank Indonesia assessed and re-classified the current payment service provider by 31 March 2022, which classified e-money as an issuer and categorized it as a PJP license category one and e-wallet as a PJP license category two. However, at the first licensing stage, the business actor needs to conduct a pre-consultative meeting with Bank Indonesia to assess their business model and determine the licensing they need to apply for. Furthermore, the payment service provider licensing must comply with Bank Indonesia Regulation Number 23/6/2021 of 2021 concerning Payment System Providers.“
In the rapidly evolving landscape of digital finance, Electronic Money (E-Money) and Electronic Wallet (E-Wallet) companies have emerged as transformative forces, reshaping how we manage and transact money in our increasingly interconnected world. To provide legal certainty amid these rapid changes, Bank Indonesia, as the authority with jurisdiction over this matter, issues Bank Indonesia Regulation Number 23/6/2021 of 2021 concerning Payment System Providers (“PBI 23/2021”).
Definition and Legal Basis
| Legal Basis | Definition | |
| E-money | PBI 23/2021 | Payment instrument that meets the following elements: a. issued based on Source of Funds in the form of rupiah currency that is deposited in advance to PJP that organizes activities of administration of Source of Funds; and b. Source of Funds in the form of rupiah currency is stored electronically in a media of server or chip. (Article 156 PBI 23/2021) |
| E-wallet | There are no specifics definition regarding e-wallet. However, e-wallet activities are including: a. payment initiation and/or acquiring services b. administration of sources of fund |
Licensing for E-money and E-wallet’s Operators
- Category one, which permits PJP to conduct activities including providing information on Sources of Funds; payment initiation and/or acquiring services; administration of Sources of Funds; and remittance services;
- Category two, which only permits PJP to conduct the following activities: a) Management of the sources of funds; and b) Payment initiation and/or acquiring services; and
- Category three, which only permits PJP to conduct remittance services and/or other activities, as determined by BI.
By issuing Bank Indonesia Regulation No. 22/23/PBI/2020 on 30 December concerning the Payment System, Bank Indonesia assessed and re-classified the current payment service provider by 31 March 2022, which classified e-money as an issuer and categorized it as a PJP license category one and e-wallet as a PJP license category two. For the business actor who will apply for the PJP license, the first thing that needs to be done is to conduct a pre-consultative meeting with Bank Indonesia to assess the business model and determine what type of the PJP license that they need to apply for.
As stipulated in Article 14 PBI 23/2021, the business actor who wish to apply for PJP license shall meet the license requirements specified by Bank Indonesia, including the following aspects:
- Institutional;
- Capital and Finance;
- Risk-Management; and
- Information System Capabilities.
The Institutional aspect includes the legality of the Company’s legal entity status, ownership, control and management. The Company applying for the First Category License must be in the form of Bank or Non-Bank Institutions. For Non-Bank Institutions, the legality aspects that must be fulfilled include being in the form of a limited liability company, have at least one Board of Directors Member whose domicile is in the territory of Indonesia. According to Articles 19 and 20 of BI Regulation 23/2021, business actor in the form of non-bank institution shall have at least 15% of its’ share ownership owned by Indonesian individual and/or Indonesian legal entity. Indonesian individual and/or Indonesian legal entity shall hold at least 51% shares with voting rights.
The capital and finance aspects encompass the minimum paid-up capital requirements, feasibility study, and business projection. Business actor applying for a PJP license category one shall have at least IDR 15,000,000,000 (fifteen billion rupiah) and IDR 5,000,000,000 (five billion rupiah) for a PJP license category two as stipulated in Article 24 of PBI 23/2021. However, Bank Indonesia can change the minimum amount of paid-up capital under specific considerations.
Besides the paid-up capital requirements proven by the documents indicating the capital structure, the business actor shall submit feasibility analysis in the forms of documents showing the company’s condition, preparedness, and financial performance within a certain period and business projection documents indicating the calculation of business feasibility in implementing the Payment System activities to be carried out and targets to be achieved.
Article 26 states that the risk management aspects include legal, operational, and liquidity risks. The application of the risk management aspects is assessed through active supervision by the Board of Directors and Board of Commissioners for Prospective PJP in the form of a limited liability company or functions or organs that perform tasks of management and supervisors for Prospective PJP in other forms.; availability of policies and procedures as well as the fulfilment of organizational structure adequacy; risk management processes and risk management functions, as well as human resources; and internal control.
The fulfillment of this aspect must be supported by documents that set out policies and procedures that relate to the management of legal risk, operational risk and liquidity risk; documents which set out any cooperation plans between the company and other parties during the organization of payment system activities; documents that set out policies and operational procedures and that also address the availability of devices relating to consumer protection; and so forth.
Lastly, to fulfill license requirements in terms of the information system capabilities, the Company shall be assessed through security control procedures, a fraud management system, an information system audit, and capability level and availability of information systems. The license requirements shall be accompanied by documents that indicate security control procedures on the system used for implementing Payment System activities; procedures, mechanisms, and infrastructure for a fraud management system; results of tests on the system reliability carried out by external and internal parties; and effective procedures, mechanisms, and infrastructure to manage business continuity and disaster recovery.
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