JAKARTA (TheInsiderStories) – Indonesian central bank (BI) hope with National Payment Gateway (NPG) all the payment transaction in the country more efficient with the interoperability of the whole financial institutions in Indonesia.
The NPG is an electronic payment transaction system incorporating instruments such as ATM cards, electronic money and credit cards, allowing customers to carry out secure non-cash transactions from any bank in Indonesia.
Governor Agus Martowardojo assess with the NPG system, the bank could save transaction rates of debit and credit card up to Rp1.8 trillion (US$129 million) per year.
Through the NPG, also could lowered merchant discount rates (MDR) to 1 percent from currently between 2 and 3 percent for debit card transactions made using ATMs and electronic data capture (EDC) machines. Now, banks shouldered high costs while conducting transactions through ATMs and EDCs because of high MDR rates.
With the new system, banks need not provide additional ATMs and EDCs and they would also benefit from the MDR decline as customers are expected to carry out more transactions.
Martowardojo added, starting May 3, the local banks officially start using the NPG logo for their services, indicating the system’s applicability in payment terminals across the country. This will carry out all authorization, clearing and settlement domestically, reducing the cost of processing transactions abroad.
Under the NPG regulation, BI will require foreign payment brands operating in the country, including JCB International Indonesia, Mastercard Indonesia, UnionPay Indonesia and Visa Worldwide Indonesia, to work with local switching companies.
Thus, this system is also beneficial for customers as they can perform payments using various instrument and delivery channels. As a result, it can also improve transactions among merchants, customers, card issuers and the government.
The system would be convenient since customers don’t have to carry several debit/credit cards for their payment transactions.
Payments can be done from various delivery channels, even from different card issuers. For instance, Telkomsel’s T-Cash user can make payments through BCA’s Flazz EDC. Aside from online payments, money withdrawals can also be done from any ATMs.
Currently, merchants use the EDC from various card issuers to meet customer needs. A merchant’s decision to use EDC is based on the benefits offered by particular banks based on the majority instrument used by their customers.
Later, merchants will not need to use the EDC anymore through the implementation of the NPG because any payment instrument can be operated on every delivery channels. This will provide incentives for card issuers.
First, they can minimize the investment costs of ATM and EDC machine infrastructures. On the other hand, they can increase their marketing costs to reach remote areas that were initially unreachable.
Indonesia is in fact, lagging behind other developing countries, such as India, Bangladesh or even Palestine, which have already set in place their own integrated payment systems in recent years.