JAKARTA (TheInsiderStories) – Electronic payment provider from China, Alipay, set up a cross border e-wallet with two state-owned banks, said the deputy governor today (11/27). The two lenders are PT Bank Mandiri Tbk (IDX: BMRI) and PT Bank Rakyat Indonesia Tbk (IDX: BBRI).
“Alipay intends to enter Indonesia in partnership with Bank Mandiri and BRI (Bank Rakyat Indonesia),” said the deputy of Bank Indonesia (BI), Sugeng, at the sidelines hearing with parliament on Monday.
In this collaboration, the banks will become an acquirer, while Alipay as an issuer. The collaboration was an implementation of BI’ Quick Response Indonesia Standard (QRIS).
With the cooperation, Bank Mandiri and Bank Rakyat Indonesia can support Alipay’ operation in Indonesia. Its because the central bank requires the settlement process of electronic money (e-money) transactions in the country must be carried out by local banks in BOOK IV scale.
In addition, BI also required the e-money issuers to place a float fund of at least 30 percent in BOOK 4. While a maximum of 70 percent of floating funds must be placed in government bonds or other financial instruments issued by the government, or in Bank Indonesia accounts. This provision applies to all electronic money issuers, both foreign, non-bank and non-BOOK IV banks.
While Alipay and Wechat Pay are already operating in Indonesia without holding the BOOK IV banks. So that operations can become illegal and must meet the central bank’ requirement before Jan. 1, 2020.
Beside Bank Mandiri, other banks in BOOK IV also propose the same license to cooperate with Alipay or Wechat Pay. Earlier, PT Bank Negara Indonesia Tbk (IDX: BBNI) Vice President Director Herry Sidharta, said the cooperation was in a legal process.
According to him, the partnering has potential to attract revenues around Rp2 trillion (US$142.86 million) from Chinese tourists who visit the country. He hope, the bank get around Rp100 billion of fee income from the transaction.
Furthermore, director at Bank Negara Indonesia Dadang Setiabudi explained, in this collaboration, the lender will become payment gateway for Wechat and Alipay’ customers transaction in Indonesia.
Bank Indonesia has put a 49 percent limit on foreign ownership in companies that offer e-money services in a bid to better regulate such services amid growing interest in financial technology.
The limit was set by central bank to all electronic money issuer companies, both operating and newly handing permits. The rules said, every company offering payment in electronic money services also must obtain a permit from BI.
The new foreign ownership limit applies only to new investment, or to any existing firm who is changing ownership. Based on central bank regulations, e-moneybusiness should secure a license from BI for various payment system service providers such as: Principal, Issuer, Acquirer, Clearing Operator and Final Settlement Operator.
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