New Regulation Has Significantly Changed E-money Landscape In Indonesia


Monday, July 30, 2018    07:36PM / By Ali Budiardjo, Nugroho, Reksodiputro / Pic From Techbullion.Com

After nine years of regulating e-money transactions, the Indonesian Central Bank (Bank Indonesia) has responded to changes in technology by overhauling Regulation 11/12/PBI/2009 on Electronic Money (PBI 11/12) and replacing it with Regulation 20/6/PBI/2018 on Electronic Money (PBI 20/6). This update examines the key features of the new regulation, which took effect immediately on its enactment in June 2018

Usage and issuer registration requirements

PBI 20/6 differentiates e-money according to the manner in which it is intended to be used so that potential e-money players can select which licence to apply for. The use of e-money can be classified as follows:

  • closed loop – the e-money can be used only as an instrument to pay the goods or services provider (ie, merchant), which also acts as the issuer of such e-money (eg, in case of a Starbucks card or a 21 Cineplex movie card); or
  • open loop – the e-money can be used as an instrument to pay a merchant that is not the issuer of the e-money (eg, in case of BCA Flazz or Mandiri E-Money).

As under regulation PBI 11/12, closed-loop players are not required to register for a licence if their floating funds are less than Rp1 billion. Notably, PBI 20/6 allows e-money players to have more than one type of e-money system (ie, server based and chip based). When a closed-loop player has two active systems, the floating funds must be calculated based on both systems. Players must provide access to reports, documents, data and information and provide clarification when requested by Bank Indonesia, as stipulated in Article 70 of PBI 20/6.

Both closed-loop and open-loop categories must place:

  • at least 30% of consumer funds into banks falling under the fourth Business Activities for Commercial Banks category; and
  • a maximum of 70% into either Bank Indonesia or as securities issued by the government or Bank Indonesia.

Licensing group

In order to provide a level playing field and avoid conflicts of interest, Bank Indonesia has set up two licensing groups to keep e-money players separate:

  • front-end players (ie, issuers, acquirers, payment gateway operators, electronic wallet operators and fund transfer operators); and
  • back-end players (ie, principals, switching operators, clearing operators and final settlement operators).

Each e-money player must meet the minimum feasibility requirements, which include:

  • complying with various institutional and legal factors;
  • meeting business and operational feasibility standards; and
  • implementing corporate governance and risk management procedures.

In addition to these feasibility requirements, new e-money player applications must also include a statement of representation and warranty to Bank Indonesia, which must be substantiated with a statement issued by a professional and independent legal consultant based on the player's legal due diligence. The statement of representation and warranty is mandatory for all licensed e-money players and should be submitted within six months from PBI 20/6's enactment.

E-money licences are valid for five years and licence holders cannot perform any corporate actions which would result in a change to their controlling shareholders within the first five-year term. In certain conditions, exceptions are possible with prior Bank Indonesia approval.

Corporate governance

PBI 20/6 introduces a controlling shareholder requirement, which is commonly found in the banking and other financial sectors. A 'controlling shareholder' is defined as a party that has:

  • 25% of a company's issued shares or more with voting rights; or
  • less than 25% of a company's issued shares, but the ability to control its management either directly or indirectly.

Controlling shareholders (including ultimate controlling shareholders) will be subject to a fit-and-proper test conducted by Bank Indonesia. Pursuant to Article 28 of PBI 20/6, this test will examine the shareholder's:

  • integrity;
  • financial reputation; and
  • financial feasibility.

The test will also consider the shareholder's competence when assessing directors and commissioners.


The fit-and-proper test may also be performed whenever there is a change in a company's controlling shareholders or members of its board of directors or board of commissioners. A supervisory report must be included, which must indicate any violations or instances of fraud on the part of the controlling shareholders or members of the board of directors or board of commissioners which has affected the company's e-money operations. The Bank Indonesia Board of Governors Regulation further regulates the fit-and-proper test's criteria and procedures.

Further, Article 31 of PBI 20/6 stipulates that parties may be a controlling shareholder in only one e-money player. This requirement is not applicable if such player operates its e-money business through conventional or Sharia principles. In addition, under PBI 20/6, the majority of the board of directors of a non-bank institution that provides e-money should be domiciled in Indonesia.


Foreign investors and minimum capitalisation

While PBI 11/12 was silent on foreign investor participation, the new regulation caps foreign participation, directly or indirectly, in any e-money player at 49%. Further, any foreign investment must be made in the form of a limited liability company, which Bank Indonesia will determine taking into consideration the ultimate shareholder or beneficial owner.

E-money players that had already obtained a licence before PBI 20/6 entered into force must comply with this limitation if they undergo a change of ownership that results in a change in their foreign shareholding.

In addition, PBI 20/6 requires all e-money players (local and limited liability companies) to:

  • have a minimum paid-up capital of Rp3 billion; and
  • gradually increase this in accordance with the increase the previous year's floating funds (January to December).

The increase in capital must be as follows:

  • For floating funds of between Rp3 billion and Rp5 billion, the minimum paid-up capital is Rp6 billion.
  • For floating funds of between Rp5 billion and Rp9 billion, the minimum paid-up capital is Rp10 billion.
  • For floating funds of more than Rp9 billion, the minimum paid-up capital is Rp10 billion plus 3% of the floating fund.


The issuance of PBI 20/6 has significantly changed the e-money landscape in Indonesia, as it applies to all licensed e-money players and prioritises consumer protection by requiring minimum capital and the placement of floating funds.


For further information on this topic please contact Elsie F Hakim or Rully Hidayat at Ali Budiardjo, Nugroho, Reksodiputro by email ( or


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