Fintech Operators in the Payment System Now Must Be Registered at Bank Indonesia

Bank Indonesia has issued a regulation that requires the implementation of fintech (financial technology/fintech) in the payment system sector to be registered with the central bank. This obligation comes into effect on January 1, 2018. This rule is contained in BI Regulation (PBI) No.19/12/17 concerning the Implementation of Financial Technology.

The central bank hopes that through this policy, the fintech business can continue to develop and contribute to boosting Indonesia's economic growth while still prioritizing risk mitigation aspects.

"BI sees that fintech growth is very good, it can be used to encourage Indonesia's economic growth. With innovation, innovation activities can be better. But it should be noted that fintech is so developed that it can cause risks. This regulation at BI is a way to balance it," said the Deputy Governor of Bank Indonesia. Sugeng, Thursday (7/12).

The scope of this PBI includes registration rules, regulatory sandbox, licensing and approval, and monitoring and supervision.

Furthermore, there are five types of fintech operators that have been classified by BI to register. Namely, payment systems, market support, investment and risk management, financing loans and capital providers, and other financial services.

The fintech business criteria are also regulated in five indicators such as innovative, can have an impact on existing products/services/technology, and/or financial business models, provide benefits to the community, can be used widely, and other criteria set by BI.

Sugeng said that this registration obligation is only intended for fintech operators who will or have carried out activities that meet fintech criteria and are under the authority of other authorities and provide fintech in the payment system sector.

For companies that have been registered and get permission from other authorities, there is no need to register with BI. However, at least provide business information to BI.

"Unless the payment system fintech has obtained a license as a payment system service provider (PJSP) from BI."

Simultaneously, the central bank also released two derivative rules from PBI Fintech, namely the regulation of members of the board of governors (PADG) No.19/14/PADG/2017 regarding limited trial space (regulatory sandbox) fintech and PADG No.19/15/PADG/2017 regarding registration, information delivery, and monitoring of fintech operations.

Acting Head of Fintech Office BI Junanto Herdiawan added that registered fintech operators would enter the regulatory sandbox to see the business model and the risks that could potentially be generated. It is likely that the fintech company will enter there for six months with a one-time renewal option.

"Later on from there, the results will be seen whether it is successful, unsuccessful, or other statuses that we have determined," said Junanto, or who is more familiarly called Iwan.

Immediately make a stricter ban on bitcoin

This PBI also stipulates the obligation of fintech operators to use Rupiah in every transaction. This means prohibiting the use of other currencies in transactions, including virtual currencies such as bitcoin.

According to Sugeng, this ban is basically due to the high volatility of virtual currencies. It is feared that it can have a negative impact, so it is not designated as a legal tender.

The central bank is currently finalizing plans to ban the use of virtual currencies as a means of payment and investment instrument. BI plans to strictly ban the virtual currency by issuing new rules in January 2018.

Although it prohibits the use of bitcoin, blockchain as a supporting technology is not prohibited. Even BI itself is exploring application blockchain technology next year.

"Blockchain technology itself is not prohibited by us," concluded Iwan.