Indonesia Fintech Regulatory Updates - October 2017

Indonesia suspends unlicensed e-wallet services

The Indonesian Central Bank (Bank Indonesia) suspended the activities of e-wallet providers Tokopedia, Bukalapak, and Shopee which allegedly have not obtained licenses to operate in Indonesia. Tokopedia recently obtained funding from Alibaba Group Holdings. Tokocash has various expansion plans in Indonesia including the support of Uber operations. In general, E-money services have slowly but increasingly been growing in Indonesia. Previously only made available through prepaid cards issued by major banks, e-money has increasingly become available in mobile accounts run by telecommunication companies. Currently such services are also offered by online taxi services and e-commerce sites. 25 e-money issuers have already been licensed.

OJK to issue regulation for financial technology companies

The Financial Services Authority (OJK) is planning to release regulations affecting fintech companies in Indonesia. The newest regulation will cover procedures on how companies may obtain licenses, permissions, and state regulatory approvals to run their fintech companies. OJK is currently in discussion with several fintech companies to ascertain the scope of this regulation.

Indonesian government to set up fintech agency

The Indonesian government has made an announcement to form a new fintech agency in Indonesia to guide the industry. The agency would have three major functions: to regulate products in the fintech industry, to provide equal treatment to fintech firms and to optimize the rules issued by the government regarding fintech. The Financial Services Authority (OJK) recorded at least 600 fintech companies in Indonesia, however, only 157 of them have reported their business activities. The OJK has also required a minimum paid-up capital for fintech firms. In future, the OJK will set up a new regulatory sandbox to assist fintech technology providers and services within the purview of the new fintech agency.