Indonesia Legal Framework on the Transnational E-Wallet Transaction

The electronic money and wallets trends are currently emerging in Indonesia. We note that 40 e-wallet applications have been registered at Indonesia Central Bank/Bank Indonesia (“BI”) as of 10 February 2020. Further, we also note that some foreign player i.e. WeChat Pay and Alipay, e-wallet providers located in China, have been expanding their services to Indonesia. Recently, WeChat Pay has managed to secure a license from Bank Indonesia for its cooperation with PT Bank CIMB Niaga Tbk.

Main Keys of the Transnational E-wallet Transaction: Please find below the main keys of the transnational e-wallet transactions.

Legal Frameworks: We note the following are legal frameworks of the transnational e-wallet transaction:

  1. Regulation of Bank Indonesia Number 20/6/PBI/2018 of 2018 concerning  Electronic Money (“PBI 20/6/2018”);
  2. Regulation of Bank Indonesia Number 18/40/PBI/2016 of 2016 concerning Payment Transaction Processing Activity (“PBI 18/40/2016”);
  3. Regulation of Bank Indonesia Number 19/8/PBI/2017 on the National Payment Gateway (“PBI 19/8/2017”); and
  4. Regulation of the Board of Governor of BI No. 21/18/PADG/2019 on the Implementation of National Quick Response Code Standards for Payments (“BI Governor Regulation 21/18/2019”)

Note: Please be advised that any transnational e-wallet services is used in order to facilitate transactions involving electronic money (“e-Money”) issued overseas, thus the said transactions are subject to the provisions set out under the e-money regulations. 

E-Money Organizer: We note from the Art. 1 (11) of PBI 20/6/2018 the following are the e-Money organizers:

Party

Remark

Issuers

Party who issue e-Money e.g. WeChat Pay or Alipay

Acquirer

Party who conduct: 1) Cooperation with merchants to process the e-money transaction; and 2) responsible for the payment settlement of merchants.

Principal

Party who is responsible for:

  1. the conveyance of Electronic Money transaction data through the network;
  2. the implementation of calculation of rights and obligations;
  3. the settlement of payments; and
  4. the stipulation of business mechanisms and procedures among its members which acts as an Issuer and/or Acquirer in Electronic Money transactions.

Switching Operator

Party who organize activities involving the provision of infrastructures which functions as the center and/or intermediary for conveying data on payment transaction using e-money.

Clearance Operator

A party who undertake and is responsible for the final settlement of financial rights and obligations for each Issuer and/or Acquirer based on calculation results from Clearance Operators.

Licensing for Transnational E-Wallet Transaction: We note that as parties which organize transactions using foreign e-money, as well as issuers of the e-Money  are required to conform with BI Regulation by cooperating with Indonesian local banks which which will be their acquirer and connected with the National Payment Gateway/Gerbang Pembayaran Nasional (“GPN”). (Art. 16 of PBI 18/40/2016 jo. Art. 39 (1) and (2) of PBI 20/6/2018).

We further note that any parties which connected to GPN i.e. (a) Issuers; (b) Acquirers; (c) Payment gateways; and (d) Other parties, as determined by BI are required to be members for at least 2 (two) switching operators. (Art. 5 (2) jo. Art 25 (1) of PBI 19/8/2017)

Requirement to Obtain BI Approval: To obtain the BI License, e-money issuers are required to fulfill the following qualifications: 1) Legality, profile, competence and performance of parties which will be invited to cooperate; 2) Security and reliability of systems and infrastructures; and 3) Legal aspects. In addition, BI may consider the result of oversight towards the performance of Operators prior to issuing such approval (Art. 19 (1) and (2) of PBI 20/6/2018).

However, we note that the BI license must be issued in a limited manner (in terms of scope, period and/or areas) and in compliance with the criteria set by BI by considering national efficiency, public interest, and fair business competition, (Art. 17 (1) and (2) and Its Elucidation of PBI 18/40/2016). Hence, we further note that BI had clarified that Alipay and WeChat Pay services could only be used by Chinese tourists and would not be available for any Indonesian users.

Utilization of QRIS: We note that the BI Governor Regulation 21/2019 requires all payment transaction in Indonesia must be processed through payment channels that utilizes the QR-Codes that are in compliance with QRIS. (Art. 7 (1) of BI Governor Regulation 21/18/2019)

The article above was prepared by Marshall S. Situmorang (Partner) and Aniendita Rahmawati (Associate).

Disclaimer: The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances. For more information, please contact us at mail@nusantaralegal.com.