12 Jul 2018
Details on the Updated E-Money Regulation


After nine long years of regulating E-Money transactions, the Indonesian Central Bank (the “Bank Indonesia) has responded to changes in technology by overhauling the Bank Indonesia Regulation No. 11/12/PBI/2009 dated 13 April 2009 on Electronic Money (“PBI 11/12”) and replacing it with the Bank Indonesia Regulation No. 20/6/PBI/2018 dated 3 May 2018 (“PBI 20/6”) with the same title. Given that the new regulation PBI 20/6 is effective immediately upon enactment, it is worth noting the general characteristics in detail, they are as follows:


Usage & Issuer Registration Requirement


The PBI 20/6 now differentiates electronic money (“E-Money”) according to the manner in which it is intended to be used in order for potential E-Money player(s) to select which license it shall apply. The usage of E-Money can be classified as either:


  1. Closed Loop, means E-Money can only be used as a payment instrument to the goods and/or services provider (merchant) who also acts as issuer that issues such E-Money (e.g. Starbucks Card, 21 Cineplex’s Movie Card, and etc.); or
  2. Open Loop, means E-Money can be used as a payment instrument to any merchant(s) who is not the issuer of such E-Money (e.g. BCA Flazz, Mandiri E-Money, and etc.).


Similar to the previous regulation PBI 11/12, Closed Loop players are not required to register for a license if their floating funds are less than 1 billion IDR. We note that the PBI 20/6 now allows E-Money players to have more than one type of E-Money system (i.e. server based and chip based). When a Closed Loop player has two active and separate systems, the floating funds shall be calculated based on both systems. Players are required to provide access to reports, documents, data and information, or to provide clarification whenever requested by the Bank Indonesia as stipulated in Article 70 of PBI 20/6.


Players for both the Closed Loop and Open Loop categories are required to place at least 30% of consumer funds into banks within the fourth category of Business Activities for Commercial Banks (“BUKU 4”) and a maximum of 70% either into the Bank Indonesia or as securities issued by the government or the Bank Indonesia.


Licensing Group


In order to provide a level playing field and to avoid conflicts of interest, the Bank Indonesia has set up two licensing groups to keep E-Money players apart. The two licensing groups are as follows:

  1. Front-end group of players which consists of issuers, acquirers, payment gateway operators, electronic wallet operators and fund transfer operators; and
  2. Back-end group of players which consists of principals, switching operators, clearing operators and final settlement operators.


Each E-Money player must meet the minimum feasibility requirements, which includes institutional and legal factors, business and operational feasibility, and corporate governance & risk management procedures.


In addition to these feasibility requirements, any new E-Money player application must also include a statement of representation and warranty to the Bank Indonesia which shall 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 6 months upon the enactment of PBI 20/6. Once the E-Money license is issued, the E-Money license is valid for 5 years and the license holder is not permitted to perform any corporate actions which would result in the change of any controlling shareholders within the first 5-year term. Under certain conditions, exceptions with prior approval from Bank Indonesia are possible.


Corporate Governance


We note that PBI 20/6 introduces a controlling shareholder term, a requirement commonly found in banks and other financial sectors. A Controlling Shareholder is defined as a party that has (i) 25% issued shares or more with voting rights; or (ii) less than 25% issued shares but has the ability to, whether directly or indirectly, control the management of the company. In addition, any controlling shareholders (and the ultimate controlling shareholder) shall be subject to a fit and proper test conducted by the Bank Indonesia. Pursuant to Article 28 of PBI 20/6, the fit and proper test shall be based on (i) integrity; (ii) financial reputation; and (iii) financial feasibility. The test will also consider the individual’s competence when assessing Directors and Commissioners.


The fit and proper test may also be performed whenever there is a change in the controlling shareholder or members of the Board of Directors or Board of Commissioners. A supervisory report must be included which indicates any violation and/or fraud by the controlling shareholder, members of the Board of Directors or Board of Commissioners which has impacted the operation of E-Money. The criteria and procedures of fit and proper test are further regulated by the Bank Indonesia Board of Governors Regulation.

Further, we note that Article 31 of PBI 20/6 stipulates that parties may only be a controlling shareholder in one E-Money player. This requirement is not applicable if such party operates the E-Money business through conventional or Shariah principles. In addition to this, the majority of the board of directors of a non-bank institution that provides E-Money should be domiciled in Indonesia according to PBI 20/6.


Foreign Investors & Minimum Capitalization


While PBI 11/12 was silent on foreign investor participation, through the new regulation the Bank Indonesia now limits foreign participation, directly or indirectly, to a maximum of 49% (forty nine percent) for each E-Money player. Further, any foreign investment must be made in the form of a limited liability company (“PMA Company”), which will be determined by the Bank Indonesia taking into consideration the ultimate shareholder or beneficial owner. E-Money players that have already obtained a license before PBI 20/6 entered into force have to comply with the limitation if they conduct a change of ownership that results in a change in foreign shareholding.


In addition, the PBI 20/6 requires all E-Money players (local and PMA Companies) to have a minimum paid-up capital of 3 billion IDR, and to gradually increase their minimum paid-up capital in accordance with the increase of floating funds of the previous year (January – December). The increase in capital has to be as follows: the minimum paid up capital has to be 6 billion IDR for a floating fund of more than 3 billion IDR up to 5 billion IDR. For a floating fund of more than 5 billion IDR up to 9 billion IDR, the minimum paid up capital has to be 10 billion IDR. The minimum paid up capital is 10 billion IDR plus 3% of the floating fund for floating funds over 9 billion IDR.


At ABNR, we have been receiving various queries from our domestic and international clients concerning these issues, and we have been assisting them to prepare and structure their proposed E-Money businesses in Indonesia. We believe that the issuance of PBI 20/6 has significantly changed the E-Money landscape as it applies to all licensed E-Money players and at the same time prioritizes consumer protection by requiring minimum capital and placement of floating funds.


By Elsie F. Hakim ( and Rully Hidayat (