Entering the New Era of E-Money

In a globalized era, there is nothing more convenient than electronic payment when it comes to choosing among available payment options. A form of electronic payment currently gaining momentum is electronic money, commonly known as e-money.

To facilitate this momentum, Bank Indonesia (“BI”) issued Regulation No. 16/8/PBI/2014 of 2014 (“Amendment”) to amend Regulation No. 11/12/PBI/2009 of 2009 on Electronic Money (“Regulation”). To implement the Amendment, BI recently issued Circular Letter No. 16/11/DKSP of 2014 on Implementation of Electronic Money (“2014 Circular”) to be in accordance with the changes introduced by the Amendment.

♦  What is E-Money?

Article 1 (3) of the Amendment defines e-money with a fixed set of criteria. Firstly, e-money is a payment method (whether card or software based) with a nominal value that is equivalent to the cash deposited in advance by the holder in the issuing institution. The nominal value is then stored electronically in a server or chip to be spent by the holder.

Another criterion of e-money is acceptance by multiple merchants other than the issuer. From this specific  element, we can infer that a company issuing gift cards to store nominal value that can only be spent for goods and services provided by their branches will not be considered e-money.

Lastly, if the issuing institution is a bank, the management of e-money must be separated from bank savings  as defined under Law No. 7 of 1992 on Banking, as amended (“Banking Law”), which include deposits and deposit certificates, checking accounts, savings and the like.

Types of E-money

The Amendment expands e-money into 2 different types: identified e-money and anonymous e-money. Identified e-money contains information on the identity of its holder, whereas the holder of anonymous emoney is not registered with the issuer.

 The types of e-money also differ in terms of the services they provide. Issuers of identified e-money are allowed to provide the following services:

  1. Top ups of other credit accounts, such as prepaid phone and electricity plans;
  2. Transactions with merchants accepting the respective e-money;
  3. Bill payment, which includes electricity, water, telephone and other routine or periodic bills;
  4. Fund transfers, covering person-to-person transfers, and transfers from and to a bank account;
  5. Cash withdrawals;
  6. Government aid programs, such as the Jakarta Smart Card (Kartu Jakarta Pintar); and
  7. Other services approved by BI.

Issuers of anonymous e-money on the other hand may only provide top ups and transaction and bill payment services. In order to provide other services, the issuer of anonymous e-money must first secure BI approval. The classification of e-money into identified and anonymous e-money was not previously stipulated under the E-Money Regulation.


There are a total of 7 parties involved in an e-money framework:

  1. Principal, which is a bank or non-banking institution responsible for managing the system and member network (comprising issuers and acquirers), whereby the cooperation among members is based on a written agreement;
  2. Issuer, which is a bank or non-banking institution issuing e-money;
  3. Acquirer, which is a bank or non-banking institution that is in cooperation with merchants to process transactions using e-money issued by parties other than the acquirer;
  4. Holder, which is an individual or entity that owns or uses e-money;
  5. Merchant, which is the goods or services provider that receives payment using e-money;
  6. Clearing house, which is a bank or non-banking institution that calculates the rights and liabilities of each issuer and acquirer involved in an e-money transaction; and
  7. Financial settlement service provider, which is a bank or non-banking institution that conducts the final settlement after calculation by the clearing house.

The requirements, necessary documents, and procedure for issuers to secure a license from BI are provided under the 2014 Circular. Note that the licensing procedure for issuers also applies to principals, acquirers, clearing houses and financial settlement service providers. The requirements and necessary documents for these parties to secure a license from BI are provided under the Annex to the 2014 Circular.

♦  Licensing Issues

As a consequence of the fixed criteria of e-money as elaborated above, there may be issues regarding certain service providers that are essentially carrying out e-money services but do not fulfill all the elements prescribed by the Amendment.

According to BI’s website, operators of electronic payment systems that do not fulfill all the criteria of emoney stipulated under the Amendment are nevertheless required to submit a report detailing information on their products, business processes, cooperation with third parties, and transaction reports. The response to the report provided by BI will provide greater clarity on what must be observed by the operators that do not satisfy all the elements prescribed by the Amendment.

September 30, 2014