Indonesia – State of Payments

Credit cards have made little headway, and even card companies’ dominance in debit card transaction processing is now under threat. The Indonesian central bank has debuted its own payment network, called the National Payment Gateway, and requires domestic banks to use the new network for local debit card transactions. Banks are in the process of converting Visa- and MasterCard-branded debit cards to comply with the new requirement.

After years of preparation and anticipation, Bank Indonesia finally issued Bank Indonesia Regulation No. 19/8/PBI/2017 on The National Payment Gateway on 22 June 2017 (NPG regulation). Under the NPG regulation, Bank Indonesia introduced its first yet very own national payment gateway (NPG) which is claimed to be Indonesia’s integrated, efficient and affordable electronic payment system network that relies on the interconnectivity and interoperability of payment systems. Upon the full implementation of this regulation, all domestic cashless transactions made within Indonesian territory are expected to be processed through the NPG as the state’s integrated payment system. Therefore, parties wishing to provide payment processing services will have to connect to the NPG integrated system network.

From now on, Bank Indonesia generally recommends that all consumers (payment service users) in Indonesia have at least one payment instrument with the NPG logo. The NPG regulation sets a deadline for banks and non-bank operators to be connected to the NPG. Issuers, acquirers and payment gateway operators in the form of banks dealing with ATM and debit cards, must be connected to the NPG by becoming a member of at least two switching institutions by 30 June 2018. For issuers, acquirers and payment gateway operators in the form of banks but not dealing with ATM and debit cards, or not in the form of banks, the deadline will be regulated in a separate board of governors of Bank Indonesia regulation which has not been issued as yet.

Bank Indonesia has only set a deadline for ATM and debit cards, but not credit cards. Principals for credit cards can start considering this matter in anticipation of when it is fully implemented.