• Regulation of BI No. 20/6/PBI/2018 regarding Electronic Money

Regulation of BI No. 20/6/PBI/2018 regarding Electronic Money

22 May 2018

Electronic money is classified in this regulation based on the scope of its administration into closed loop and open loop electronic money, and based on the value storage media into server based and chip based electronic money, as well as based on the recording of identity of its users into unregistered and registered electronic money.

Points in the Regulation:

  • 51% of shares of an electronic money issuer must be owned by domestic parties while foreign parties are only allowed to own at the maximum of 49% of shares of an electronic money issuer. If there is any foreign ownership in the Non-Bank Institution, the calculation of such foreign ownership portion shall include direct and indirect ownership pursuant to the assessment by Bank Indonesia.  
  • The regulation of minimum paid-up capital is included into the institutional aspect to ensure a good financial condition.
  • BI increases the maximum limit of unregistered electronic money value from Rp1 million to Rp2 million.
  • The regulation requires all parties acting as open loop or closed loop electronic money operators with Float Fund of not less than Rp1,000,000,000.00 (one billion rupiah) to obtain prior license from Bank Indonesia.

Licenses for Electronic Money Providers

  • Front end providers and
  • Back end providers

Application for electronic money operator license must be submitted in accordance with the classification of Payment System Service Providers (PJSP), namely front end operators (comprising issuers, acquirers, payment gateway operators, e-wallet operators, and fund transfer operators) and back end  operators (comprising principals, switching operators, clearing operators, and final settlement operators). Each party may only become an electronic money operator in one same class of PJSP.

Additional Requirements

The regulation requires parties applying for license as electronic money operator to meet the requirement of general aspect, namely being an entity in the form of Bank or Non-Bank Institution incorporated as a limited liability company, and the requirement of feasibility, which includes institutional and legal aspect, business feasibility and operational readiness aspect, and the aspect of corporate governance, risk management and control, as well as submitting representations and warranties.

Electronic money operators are also required to apply risk management effectively and consistently , to apply information system security standard, to fulfill the obligation of processing electronic money transactions domestically, to apply interconnection and interoperability and to apply the principles of anti-money laundering, prevention of terrorism financing, and the principle of consumer protection (specifically for Electronic Money Issuers). In addition, this regulation also requires electronic money issuers to record the float fund in the account of immediate liabilities or other liabilities and to place not less than 30% of Float Fund in cash (for electronic money issuers in the form of commercial banks based on business activities (BUKU) 4), or in giro with a Bank classified in BUKU 4 (for other issuers) and a maximum of 70% of the Float Fund in commercial papers/financial instruments issued by the Government/Bank Indonesia, or in an account with Bank Indonesia. Meanwhile, issuers intending to become digital financial institutions are required to obtain prior approval from Bank Indonesia.

Other sections in this regulation sets out provisions on the fees that may be charged by electronic money issuers, merger, dissolution, demerger, and acquisition, reports and supervision, as well as sanctions and others.

Validity of License

The license as Electronic Money Operator is to be issued by Bank Indonesia and valid for a period of 5 years, and it can be renewed upon application which must have been submitted by no later than 6 months prior to its expiry. In processing applications for licenses submitted by Non-Bank Institutions, Bank Indonesia has the authority to conduct fit and proper test on the controlling shareholders, members of the board of directors and members of the board of commissioners. Such fit and proper test may also be conducted in the event of any plan for changes in the controlling shareholders, board of directors or board of commissioners, or there is result of supervision indicating the occurrence of significant violation or fraud.

Effective Date

This regulation has come into effect as of May 4, 2018, by revoking Regulation of the Bank Indonesia Number 11/12/PBI/2009, Regulation of the Bank Indonesia Number 16/8/PBI/2014 and Regulation of the Bank Indonesia Number 18/17/PBI/2016.

For more information how BDO Indonesia can help you in planning and navigate this major change, please contact our technical team at: