On June 22, 2017, the central bank of Indonesia (Bank Indonesia – “BI”) issued BI Regulation No. 19/8/PBI/2017 regarding the National Payment Gateway (the “BI Regulation”), which aims to create a secure, efficient, and reliable domestic payment system by facilitating non-cash transactions through the establishment of a National Payment Gateway (“NPG”). The NPG was further regulated on September 20, 2017, by BI Board of Governors’ Regulation No. 19/10/PADG/2017 regarding National Payment Gateway (the “Governors’ Regulation”), which sets out more detailed arrangements for certain aspects of the NPG.

♦ Scope of the NPG

The NPG covers any domestic electronic transaction involving a payment instrument issued by an Indonesian Issuer, namely by regulating:

  1. interconnections between switching networks;
  2. the interconnection and interoperability of payment channels, such as ATM networks, electronic data capture (EDC), agents, payment gateways, and other payment channels; and
  3. the interoperability of payment instruments, such as ATM/debit cards, credit cards, electronic money, and other payment instruments.

♦ Parties

In general, the NPG involves NPG Organizers and NPG Connected Parties. NPG Organizers comprise (i) standards institutions, (ii) switching institutions, and (iii) services institutions. NPG Connected Parties comprise (i) card issuers, (ii) acquirers, (iii) payment gateway organizers, and (iv) other parties as determined by BI.

♦ Implementation

Domestic processing and final settlement in BI

Currently, the vast majority of card-based transactions are processed offshore. In order to ensure that more transactions are processed inside Indonesia, all domestic electronic transactions required to be processed through the NPG, and switching institutions and services institutions will be required to process final settlement using the Bank Indonesia-Real Time Gross Settlement (BI-RTGS) system—a system for electronic transfer of Rupiah among banks, in real time on an individual transaction basis.

National branding and universal acceptance

National branding will be established, which includes national logos to be featured on all payment instruments issued by NPG Connected Parties as of January 1, 2018. NPG Connected Parties must accept all payment instruments that feature the national logo.

Pricing schemes

NPG Organizers must abide by the pricing scheme determined by BI, which is based on several principles, including cost recovery, a reasonable margin, risks, convenience, etc. The pricing scheme for NPG Organizers, switching organizers which that cooperate with other switching institutions, and NPG Connected Parties consists of sharing infrastructure (“SI”), terminal usage fees (“TUF”), and merchant discount rates (“MDR”), each of which are described in detail in the Governors’ Regulation.

♦ Reporting obligation

Every NPG Organizer is required to submit periodic and incidental reports to BI. The periodic reports must be submitted quarterly and annually, while incidental reports are required for reporting (i) change of capital, shareholder composition, or management of standards institutions, (ii) change of data and information in the documents submitted when submitting the application for determination to BI, and (iii) other events as required by BI.

October 26, 2017

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