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In line with the 2025 Payment System Blueprint in Indonesia (Blueprint SistemPembayaran Indonesia 2025), Bank Indonesia (“BI”) has continuously carried out regulatory reforms to accelerate the development of digital economy and finance. One of the most recent and notable efforts to augment such reform is the refurbishment of the implementing guidelines on payment system through the issuance of BI Board of Governors Regulation No. 24/7/PADG/2022 on the Organization of Payment System by Payment Service Provider (PenyediaJasaPembayaranor “PJP”) and Payment System Infrastructure Provider (PenyelenggaraInfrastrukturSistemPembayaran or “PIP”) dated 30 June 2022 (“BI BOG Reg 24/2022”). BI BOG Reg 24/2022 enters into force on 1 July 2022.
The scope of BI BOG Reg 24/2022 suggests that it serves as the regulatory umbrella for the operational guidelines of PJP and PIP, effectively repealing and replacing a host of implementing regulations relating to payment system organization as follow:
This article aims to provide a panoramic summary of the salient rules under BI BOG Reg 24/2022 and will discuss the following subject matters:
Calculation for Share Ownership and Control
As a refresher, foreign share ownership in each PJP and PIP is 85% and 20% respectively pursuant to BI Regulation No. 22/23/PBI/2020 on Payment Systems, subject to certain control limitation. For a PJP, foreign parties are only allowed to hold up to 49% of all shares with voting rights. For a PIP, foreign parties are only allowed 20% of all shares with voting rights.
BI BOG Reg 24/2022 introduces a number of provisions concerning the calculation of ownership and control that are applicable to PJP and PIP as follows:
1. Foreign share ownership
Foreign share ownership is calculated directly and indirectly. Direct share ownership is calculated based on 1 (one) level of share ownership above the Non-Bank Institution upon the submission of application for PJP license or PIP appointment. On the other hand, indirect share ownership is calculated up to the ultimate shareholder.
2. Control
Control is calculated based on share composition with collective voting rights for each level of share ownership up until the ultimate shareholder with the largest individual voting right owned by a domestic party.
3. Materiality Test
In supervising the activities of PJP and PIP, BI BOG Reg 24/2022 provides an avenue for BI to implement any policy regarding ownership and/or control, including of PJP and/or PIP in the form of public company, by considering materiality scale and/or other aspects with the aim to create an equilibrium between innovation, stability and national interest.
Conditional approval for PJP License and PIP Appointment
In terms of licensing, BI BOG Reg 24/2022 sets out a novel licensing procedure namely a conditional approval which is facilitated by (i) an exception of one or more licensing phase and/or (ii) stipulation of a certain period of time. A conditional approval for PJP License and PIP Appointment may be granted under an exceptional circumstance such as pandemic, natural disaster and/or other conditions as may be determined by BI. Such conditional approval may be revoked by BI on the occurrence of which the relevant PJP or PIP must fulfill all commitments owed to their Service Users and/or other parties cooperating in the organization of such Payment System prior to the revocation of the conditional approval.
Payment System Organization
BI BOG Reg 24/2022 sets out a broad range of rules pertaining to payment system organization, the most important of which are detailed below:
Innovations in Payment System Technologies
BI BOG 24/2022 sets out provisions concerning regulatory sandbox for innovations in payment system technologies. In conducting the same, the relevant PJP, PIP or other party must submit a report to BI which contains details on (i) the development of the business model and/or transactions under trial, (ii) issues, hindrances and/or challenges faced during the trial; and/or (iii) any other information as may be requested by BI. Aside from the principal report, BI may also request incidental report or any other additional report.
Payment System Supervision
In implementing risk-based supervision, BI may require PJP and PIP to conduct a self-assessment. The guidelines to such self-assessment will be published in BI’s website or other media. BI BOG 24/2022 also set forth provisions on administrative sanctions in the form of monetary fines for the failure to submit online and offline periodic reports.
SRO
As a refresher, based on the past CL 13/2011 which is replaced by BI BOG 24/2022, SRO is a forum or institution in the form of an Indonesian legal entitythat is appointed by Bank Indonesia to support the organization of payment system industry. SRO is intended to represent the industry as non-government organization with statutory responsibility to regulate its own members through the adoption and enforcement of rules of conduct for fair, ethical and efficient practices in its industry. Provisions concerning SRO under BI BOG 24/2022 are set out with considerable details as follow:
Our Note on Further Action
Through the issuance of BI BOG 24/2022, BI has displayed a commendable effort in streamlining and consolidating the plethora of implementing regulations in payment system industry, one that prioritizes high scrutiny in supervision yet must be carried out without sacrificing efficacy.Nonetheless, many provisions under BI BOG 24/2022 are set out in a broad-brushed manner, leaving room for interpretations and clarifications from BI. Looking at the regulatory trends that seems to be adopted by BI recently, PJP and PIP must embrace such dynamic and position themselves into a flexible condition that enables their organization to adjust to any regulatory requirements. This can be achieved by, to name a few, establishing an internal compliance team that mainly liaises with BI official or establishing a channel of communication with external counsels to enable swift adjustment of the organization to the most recent regulatory requirements.
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