E-Money: Change in foreign ownership

E-Money: Change in foreign ownership

14 May 2018

The Indonesian central bank, Bank Indonesia ("BI"), has issued Regulation Number 20/6/PBI/2018 ("PBI 20/2018") on E-Money replacing Regulation Number 11/12/PBI/2009 on E-Money and its amendments ("Old Regulations") effective on 4 May 2018 ("Effective Date"). PBI 20/2018 was issued to promote the use of e-money in Indonesia whilst addressing consumer protection, prudential principles, risk management, and healthy competition.
 
Foreign investment limit
 
PBI 20/2018 restricts foreign ownership of non-bank e-money provider to 49% (formerly allowed up to 100%). Upon a change of foreign shareholders, existing e-money issuers will be subject to the foreign ownership restriction. E-money applicants who are in the process of obtaining approval will be subject to PBI 20/2018.


Notable differences between PBI 20/2018 and the Old Regulations

No. Item Old Regulations PBI 20/2018

1.

Foreign ownership

Open 100%

Open 49% (non-bank e-money issuers)

2. Classifications
Facilities available to e-money users differ between:
Classifications are as follows:
  • Registered users (broader range of services including top-ups, bill payments, fund transfers, user registration, up to cash withdrawals); and
  • Transactions
    • Closed loop (transactions between the user and the e-money issuer for goods/services);
    • Open loop (transactions between the user and parties who are not the e-money issuer).
  • Unregistered users (limited range of services including top-ups, transaction payments, and bill payments).
  • E-money storage
    • Server based (e-money is stored in a server);
    • Chip based (e-money is stored in a chip).
  • User registration
    • Unregistered (issuer does not know the user's identity);
    • Registered (issuer knows the user's identity).
3. National payment gateway - All BI licensed e-money issuers must engage in interconnection and interoperability provisions related to the national payment gateway. 
 

 
4. Capital requirement No minimum capital requirement.
Non-bank institutions must have minimum paid-up capital of IDR 3 billion where the float managed:
  • from above IDR 3 billion up to IDR 5 billion, minimum paid-up capital must be IDR 6 billion;
  • from above IDR 5 billion up to IDR 9 billion, minimum paid-up capital must be IDR 10 billion.
  • from above IDR 9 billion, minimum paid-up capital must be IDR 10 billion plus 3% of the float.
5. Float Non-bank institution issuers must place 100% of their float in commercial banks in the form of savings, giro and/or deposit accounts. Issuers are required to have at least 30% of their float in cash or stored in a current account at a bank (giro); 70% of their float may be in the form of securities or financial instruments issued by the Government or BI, or, stored in a BI account. 
 
6. Information technology safeguards E-money issuers must apply operational risk management policies and financial risk management policies. They are also required to audit their information technology systems and submit the audit report to BI. E-money issuers are required to have operational risk and financial risk management policies, including improving financial safety by using two factor authentications for transactions above IDR 2 million. Auditing of information technology systems to be performed at least once every 3 years.
 
7. E-money issued outside Indonesia - E-money issued outside Indonesia may only be used in Indonesia through the national payment gateway, where BI licensed e-money issuers must cooperate with BI licensed payment system operators. 
 
8. Transaction limits Unregistered users may only store e-money up to IDR 1 million whilst registered users may store e-money up to IDR 5 million.
 
Unregistered users may only store e-money up to value IDR 2 million whilst registered users may store e-money value up to IDR 10 million.
     
9. Prohibition on change of  shareholder composition during the licensing period
 

 
During the initial licensing period (of 5 years), a non-bank institution is not permitted to change shareholders without BI approval.

Main time frame PBI 20/2018

No. Category Requirements under PBI 20/2018
  
1. E-money issuers applying for a BI license from the Effective Date
 
Compliance with PBI 20/2018 required.
2. Existing e-money issuers (licensed by BI) To provide BI with representations and warranty documents by 4 November 2018.
3. Non-bank institution issuers Compliance with minimum paid-up capital requirements by 4 November 2018.
4. Open loop issuers with a float of less than IDR 1 billion Must apply for BI license by 4 November 2018.
5. Closed loop issuers with a float of IDR 1 billion or more
 
Must apply for BI license by 4 November 2018.

For questions or comments, please contact:

Dewi Sawitri - Senior Associate, Indonesia: dewi.sawitri@dnfp.com

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