JAKARTA (TheInsiderStories) - Indonesian central bank (BI) announced five initiatives of Bank Indonesia in payment systems to improve the payment system in the country. The state-owned banks led by State Enterprises Ministry plans to establish switching company to implement National Payment Gateway (NPG) this year.
According to BI statement, NPG is developed to meet people’s demands for efficient payment system and is able to reach the whole community. NPG, according to the central bank, is infrastructure that integrates a variety of payment channels to facilitate electronic payment transactions.
The main principles of BI in developing the NPG is to consider the acceptance of stakeholders, time to market, settlement, security, healthy competition and promote the national interest. Therefore, the conceptual design of Bank Indonesia in the NPG is more institutional arrangement to ensure the interconnection and inter-operability. The NPG system will be implemented gradually from 2016, which in turn will provide more benefits for society and the development of the national cards.
The other initiative on the use of chip and pin cards Payment Instruments (APMK), has been initiated since 2005 on Credit Card. The use of chip technology is believed to reduce the risk of card fraud and theft of identity data on the card (skimming).
Therefore, in 2015 the Bank Indonesia issued stipulation (SE No. 17/52/DKSP) regarding the implementation of National Standards Technology Online Chip and Pin of 6 digits for ATM/Debit issued in Indonesia and SE No. 17/51/DKSP regarding Operation Card Payment Instruments.
BI together with the industry has been gradually preparing for the use of chip technology in ATM/Debit cards, and will be implemented starting July 1, 2017 through to December 31, 2021. This means that on January 1, 2022, all ATMs/Debit should use chip technology (except with certain nominal that can still use magnetic stripe) and processed internally by banks.
In addition to security concerns, the use of these chips promotes domestic processing of national interest so as to support national economic efficiency and independence.
Payment Transaction Processing
This provision aims to accommodate and anticipate innovation in the field of payment systems, especially with the growth and development of e-commerce. It also supports initiatives across ministries and authorities and is already in line with the roadmap and the plan of Government Regulation (RPP) on E-commerce.
The rules govern the operation of payment systems processing, internal processing, the obligation to use Rupiah and conduct transactions through the national banking system. This rule also applies to the Financial Technology and will be issued in September 2016.
BI also supports the development of Financial Technology, to continue to encourage innovation and healthy competition, but remains in the corridors of prudence. Therefore, in the near future, a number of policies related to FinTech will be issued by the central bank such as :
a. FinTech Office: unit/task force to perform evaluation, assessment and mitigation of risks, as well as related research activities FinTech initiator. In addition, the FinTech Office is also an arena for collaboration among industry participants, and ensuring the synergy and harmony among fellow regulators.
b. Regulatory Sandbox, which is a laboratory that will be used by businesses and regulators to conduct testing of the product or business model, as well as a means for Bank Indonesia to facilitate the development of innovation and test policies to be issued. These two policies will also be launched in the near future.
To support the distribution of social assistance programs by the government, BI has taken an initiative for the distribution of business model in non-cash social assistance, which prioritize on interconnection and inter-operability in order to prioritize national interests.
One form of implementation of business models of non-cash social assistance is through cooperation with HIMBARA (Association of the State Bank) and agent e-Warong (PKH KUBE), initiated by the Ministry of Social Affairs.
In the future, to support the efficiency, accuracy of the intended use of the account, and sustainability for the participating banks then Bansos (social aid) integration will be carried out in one account as well as national data stored.
This business model will be extended to involve institutions or other institutions, so as to encourage financial inclusion in Indonesia.
BI is aware that rapid technological developments that affect the development of the Payment System in Indonesia. As authorities Payment Systems, Bank Indonesia will continue to act as regulator, facilitator, overseer for the achievement of Payment System a safe, smooth, efficient, attention to expanding access and promoting national interests. (*)