Making Sense of Electronic Money Issues

In a globalized era, there is nothing more convenient than electronic payment when it comes to choosing among available payment options, commonly known as electronic money (e-money). In Indonesia, the total transactions are still dominated by fund transfers, payments of government securities and the use of debit and credit cards. However, e-money has the potential to increase financial inclusion. Indonesia's financial inclusion rate had risen to 36% in December 2014 from 20% in 2011. By August 2016, e-money transactions had already reached 6.6 trillion rupiah  which is 94% of 2016's figure, according to Bank Indonesia (BI). While the bank has generally been supportive of e-money as a means of promoting financial inclusion, it faces the challenge of ensuring online security, with the increase in electronic transactions in Indonesia. In light of evolving technological innovation and information systems in Indonesia, especially those related to e-commerce and the financial technology industry, the Indonesian government seeks to more properly regulate electronic payment systems and transactions in Indonesia.

Currently, Bank Indonesia has restricted the services of the four platforms on last October  as they were still not registered as electronic money operators. As a security system, the restrictions were necessary to manage the licensing process and protect consumers. To provide e-money products and services, a company must be licensed by the central bank as the national payments system authority. Based on central bank regulations, e-money businesses should secure a license from Bank Indonesia for various payment system service providers such as: Principal, Issuer, Acquirer, Clearing Operator and Final Settlement Operator. The central bank first introduced regulations for e-money in 2009 (PBI Number 11/ 12/ PBI/ 2009). They went through two rounds of revisions, in 2014 and 2016, to keep up with developments in the digital economy. In addition, BI was criticized for stating that bank customers would be charged top-up fees to cover maintenance costs of the cashless system. In setting the fee ceiling, BI has freed issuing banks to determine whether they would charge top-up fees to their own customers or not. As a result, on September the central bank has issued its regulation on electronic money (e-money) card transactions, the Bank Indonesia Board of Governors Regulation Number 19/10/PADG/2017 on national payment gateways, which, in effect, allows banks to free their customers from paying the recently debated top-up fees. Since e-money began growing in popularity and can be assumed as a support for further economic growth and financial inclusion, one thing that should be primarily consideration is the regulations have to catch up with rapid developments of online currencies. By far, it seems the growth of e-commerce businesses was faster than the development of regulations, for instance, there are lack of regulations that consider of more spohisticated instruments such as crypto currencies, bitcoin or altcoins which it becomes extremely difficult to account for transactions made using existing cryptocurrencies, a mode of exchange that is complex and (in some cases) impossible to track. Improvements in the legal, regulatory, and institutional environments—which tend to be useful for development in general—can have a favorable effect on financial inclusion. Also, policy makers can promote financial inclusion by supporting innovative business models that increase the outreach and lower the cost of payment and financial services.