Access: Access to facilities to receive money is often limited Those who would benefit most are therefore the least likely to benefit from remittances from migrant worker Cost: A number of mechanisms for cross-border remittances already exist, ranging from international bank transfers, specialist remittance companies and indeed a large ‘informal’ sector where methods for transferring cash are varied and difficult to quantify. These mechanisms are prohibitively expensive for small denomination transfers, which limit the ability of individual workers to distribute funds to a larger number of people and penalise the poor who can only afford to send small amounts. The informal sector also presents challenges to governments and their agencies
Digital Payment in Indonesia - Pembayaran Digital
ROLLING OUT DIGITAL PAYMENT PLATFORMS - An Indonesian Perspective Heru Sutadi 17th Annual Cards & Payments Asia 25 – 27th April 2012 Singapore
2ICT STATISTICSUntil the end 2011, the status of ICT infrastructure and servicesare as follows:Fixed line subscribers (PSTN): 8.328.180 subs (3.49 %)Fixed Wireless Access: 32.819.564 subs (13.81 %)Mobile: 213.256.931 subs (89.79 %)Internet users: 72 Millions (30,31 %)
Digital Money Mobile financial services was first implemented in 2001 by Mobipay in Spain, while mobile banking service has been given for years in some countries Mobile money becomes the focus of attention because of this phenomenon a success in several developing countries Predicted until the end of 2013 more than 424 million mobile phone users will send money to other mobile phone users in the same country and 73 million will be sending money to another country There are three main types of financial services: mobile money transfer, mobile banking and mobile payment
CURRENT MARKET CHALLENGES Although the market is well established, there are a number of barriers currently restricting it from reaching its full potential and fulfilling the basic consumer needs: Access Security Cost Regulation.
IMPLEMENTATION Compared to the bearer business model, mobile operators who want to cooperate with financial institutions whilst being present at the customer interface (cash in/out) are more dependent on the regulatory environment of their respective country. If the agency rules prevent them to handle cash and undertake the customer due diligence procedures for AML/CFT prevention, then they may not be able to choose the business models.
FINANCIAL REGULATION The first level of financial regulation is AML/CFT compliance, which generally becomes applicable when the mobile operator becomes involved in cash handling at the consumer interface. The next level of regulation applying to mobile operators is prudential regulation. Prudential regulation becomes applicable when risks increase for the involvement of the mobile operator in the financial transaction, for consumers and for the wider financial system.
PRUDENTIAL REGULATION Prudential regulation ensures that regulated entities are financially sound and promotes their prudent behavior. The key aim of prudential regulation is protecting the interests of consumers and the quality of an institution’s systems for identifying, measuring and managing the various risks in its business. Prudential regulation can apply in various measures depending on the risks.
MOBILE OPERATOR PERSPECTIVE From a mobile operator perspective following thresholds of prudential rules depending on the risks involved seem useful: Payment regulation (low risk – light prudential rules) E-money (medium risk – medium heavy prudential rules) Deposit taking, i.e. banking (high risk – heavy prudential rules) However much such a risk-based approach would be desired, it is not the rule, and in many countries banking regulation applies to the majority of financial services offered independently of the risks involved.
BENEFIT TO MOBILE OPERATOR New customer acquisition (individual, corporate) Non-traditional Telco revenues Transaction fees Share of Forex spread Finders/consumer sign-up fees Future m-banking revenue (e.g. utility bill payments) Increase in ARPU Reduced churn (e.g. one operator reduced churn from 3% to 0.5% per month) Meets government service obligations and CSR Agendas Opportunity to up-sell (e.g. mobile content, prepaid to post paid)
MOBILE OPERATOR SITUATIONSFrom a mobile operator perspective agency rules become relevant with regard to two situations:2. Can the mobile operator become an agent? • Becoming an agent allows the mobile operator to use its own distribution chain to accept/disburse cash at both ends of the MMT service.3. Can a mobile operator operating a payment service or e-money use other retailers as agents for MMT services?
DIGITAL WAVES Telekomunikasi Entertainment Financial Services Telecommunication Broadcasting Game Voice Music TV Cable TV Internet VOD Satellite TV Penyiaran IP-TV Interactive TV DIGITAL Mobile services ANALOG Internet / Multimedia RUU Konvergensi Telematika UU 36/199 Telekomunikasi RUU perubahan Penyiaran UU 32/2002 Penyiaran RUU perubahan ITE UU 11/2008 ITE Regulatory old model RUU TIPITI Regulatory new modelOld Law & Regulatory ICT Act & Reg New Law & Regulatory
Toward a Less cash society Grand design E money – prepaid card as stated at the PBI no 7/52/PBI/2005 concerning the Card Payment Instrument Operational Activity Definition: Prepaid product /e-money : stored-value or prepaid products in which a record of the funds or value available to a consumer is stored on an electronic device in the consumer’s possesion Access Product (debet card and credit card)PBI : Peraturan Bank Indonesia / Indonesia Central Bank Rule
DIGITAL MONEY IN INDONESIA Some operators provide M-Money services: International remittances which are targeted by Indonesian workers who were working in foreign countries who wish to transfer money to families in Indonesia Mobile banking services. Some banks have been working with telco operators to include this services as basic services commensurate with the services ringtones, wallpapers or service information and content Payments also begin to move since taking over two years ago, with the term e-wallet.
CASE STUDY (1) Telkomsel Cash User (t-cash) 630,287 800,000 728,171 604,754 600,000 482,236 503,267 531,557 400,000 348,587 513,511 112,076 200,000 103,709 108,898 104,935 -
CASE STUDY (2)Merchant Category %Retail 94.0% Features :Fashion/ Life style 1.2%Bill Payment 0.1% 3.Cash inEducation & University 0.4%Food and beverage 0.8% 4.PurchaseInsurance 0.0% 5.Online PurchasePortal 0.1% 6.Bill PaymentCellular Shop 0.5% 7.P2P TransferTelkomsel Channel 1.1% 8.Cash OutOthers 1.6% Number of partners : over 150 companies
LAW AND REGULATION There are several law and regulation that must be consider to provide M-Money services: Law No. 11/2008 about Information and Electronic Transaction Law No. 10/1998 about Banking Law No. 25/2003 about Anti Money Laundering (including Combating Financing of Terrorism) Indonesian Central Bank Decree No. 11/2009 about E- Money.
Bank Indonesia Regulation no 11/12/PBI/2009 concerningElectronic Money Bank or Non Bank Institution has to obtain the license from Bank Indonesia as Principal, Issuer, Acquiere, Clearing Procsessor and /or End Settlement Processor Entity Legal Form :Non Bank institution shall be incorporated as Limited Company that abides to the Laws of Indonesia. Currency Usage must be Indonesian Rupiah Enhancement of security Technology : Utilizes a reliable and secure system, Maintain and enhances Electronic Money security Technology, Possesses written standard operating procedures pertaining e-money activity, Maintain the security and confidentiality of the data. The Limit of e-money : Rp 1,000,000.- for unregistred type of customers Rp 5,000,000.- for registered type of customers The value of the e-money must equal with the deposit value.
Conclusion The trend of digital money in Indonesia is increasing significantly recently. It means that this kind of business is very attractive in the very near future The Licence is granted by Bank Indonesia to Bank and Non Bank institution to be a Principal, an Issuer, an Acquiere, a Clearing Processor and /or an End Settlement Processor The ICT infrastructure as well as the Broadband Backbone and Broadband Access is seriosly planned by the Indonesia Government to facilitate in implementing the digital money especially m-money.
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