Indonesia Payment Systems Blueprint 2025

1 Indonesia Payment Systems Blueprint 2025 Bank Indonesia : Navigating the National Payment Systems in the Digital Era BANK INDONESIAJ alan Thamrin No. 2 Jakarta Jakarta, 28 November 2019 Copyright: Bank Indonesia 2019 It is forbidden to quote, reproduce, and translate part or all of the contents of this book without written permission from the and layout by Donald Bason and Fathahillah DipanegaraIndonesia Payment Systems Blueprint better and equal Indonesia Bank Indonesia : Navigating the National Payment Systems in the Digital Era iContents Abbreviations iFigures and diagrams iiiGraphs iiiTables iiiRemarks from the Governor of Bank Indonesia ivRemarks from the Deputy Governor of Bank Indonesia ivEXECUTIVE SUMMARY 1 CHAPTER 1: Strategic Environmental Backgrounds 6 CHAPTER 2.

2 Indonesia Payment Systems Blueprint 2025 Policy Context Indonesia s Payment System Vision 2025 20 CHAPTER 3: Roadmap Key Initiatives 30 Open Banking 30 Retail Payment Systems 33 Box Enhancement of National Clearing System (SKNBI) 35 Box Response Code Indonesian Standard (QRIS) 37 Financial Market Infrastructures 38 Data 41 Regulatory, Licensing, and Supervisory Roadmap Conclusion 49 Glossary viReferences xAnnex A xiiiAnnex B xvBank Indonesia : Navigating the National Payment Systems in the Digital Era iiAbbreviations APMU Currency Based Payment APMR Deposit Account Based PaymentAPMD Non-Deposit Account Based PaymentAPI Application Programming InterfaceAML-CFT Anti Money Laundering/Combating the Financing of TerrorismASPI The Association of Indonesia Payment System BI-ETP Bank Indonesia Electronic Trading PlatformBIS Bank for International SettlementsBI-RTGS Bank Indonesia Real Time Gross SettlementBI-SSSS Bank Indonesia Scriptless

3 Securities Settlement SystemBUKU Commercial Bank ClassificationCASA Current Account Saving AccountCCP Central CounterpartyCPMI Committee on Payment and Settlement SystemsCSD Central Securities DepositoryDLT Distributed Ledger TechnologyDVP Delivery Versus PaymentsEDC Electronic Data CaptureESMA European Securities and Market AuthorityFATF Financial Action Task ForceFSB Financial Stability BoardGPN Gerbang Pembayaran Nasional (National Payment Gateway)IMF International Monetary FundIPS Indonesia Payment SystemsIPSB Indonesia s Payment System BlueprintISO International Organization for StandardizationIT Information TechnologyKPEI Kliring Penjaminan Efek IndonesiaKSEI Indonesia Central Securities DepositoryKYC Know Your CustomerNIST National Institute of Standards and TechnologyNSICCS The National Standard for Indonesia Chip Card SpecificationOBIE Open Banking Implementation EntityOECD The Organisation for Economic

4 Co-operation and DevelopmentOJK Otoritas Jasa Keuangan (Financial Service Authority)OTC Over the CounterPFMI Principles for Financial Market InfrastructurePP Government RegulationPSP Payment System ProviderPSR Payment System RegulatorPVP Payments versus PaymentsQRIS Quick Response Code Indonesia StandardRBI Reserve Bank of IndiaRBNZ Reserve Bank of New ZealandSBN Government of Indonesia SecuritiesSBBI Bank Indonesia s SecuritiesSKNBI National Clearing System SSK Financial System StabilityUNCTAD United Nations Conference on Trade and

5 DevelopmentVPA Virtual Payment Address Bank Indonesia : Navigating the National Payment Systems in the Digital Era iiiFigures and Diagrams Figure 1 The Digital Revolution 7 Figure 2 Demographic Potential 7 Figure 3 Policy Challenges in the Digital Age 13 Figure 4 Digital Banking Pillars 23 Figure 5 API Partnership Model 26 Figure 6 Summary of API Partnership between Banks & Fintech in Indonesia 32 Figure 7 Payment Scheme Before and After QRIS 38 Figure 8 Sandbox Framework 46 Figure 9 IPS Blueprint 2025 Roadmap and Timetable 47 Diagram 1

6 Omnichannel in Indonesia 11 Diagram 2 Main Driver of Digitalization Trend in The Era of Industry 17 Diagram 3 Configuration of Indonesia Digital Economy and Finance 2025 21 Diagram 4 Operational Framework of Indonesia Payment Systems Blueprint 2025 31 Diagram 5 Open API Standard Policy Framework 33 Diagram 6 Indonesia Retail Payment System Configuration 2025 34 Diagram 7 Indonesia Financial Market Infrastructures Configuration 2025 40 Diagram 8 Data Hub Configuration 43 Diagram 9 Integrated Regulatory, Licensing, Supervisory Framework 45 Diagram 10 Payment Systems Supervisory Framework 46 GraphsGraph 1 Retail Payment Transaction Volume in Indonesia 7 Graph 2 Share of Adult s Account Ownerships in Indonesia 8 Graph 3 Fintech Development in Indonesia 8 Graph 4 The size of Internet Market in South East Asia 9 Graph 5 E-commerce Transaction 9 Graph 6 Loans via fintech lending 9 Graph 7 Fintech Payments Transaction (Electronic Money)

7 10 Graph 8 The share of E-Commerce Payment Methods (by volume) 10 Graph 9 Bank versus Non-Bank E-Money Users and Merchants Acceptances 10 Graph 10 Bank vs Non-Bank E-money Floats Fund 10 Graph 11 Indonesian Digital Banking Classification 12 Graph 12 Significant Global Cyber Attack (Number of Incidents) 12 Graph 13 Imports of ICT versus Total Imports (2 Digit HS) 12 Graph 14 Indonesia Banking Digital Technology Adoption 24 Graph 15 Progress on Business Digitalization in Indonesian Banking 25 Graph 16 Target Outcomes of IPS Blueprint 2025 49 TablesTable 1 Digital Penetration 8 Table 2 Open API Implementation in Several Countries 24 Table 3 Scope of API Partnership Contract between Banks-Fintech 24 Table 4 Commitment of OTC Derivative Market Reforms 39 Bank Indonesia .

8 Navigating the National Payment Systems in the Digital Era ivREMARKSGOVERNOR OF BANK Indonesia In the past decade, we have witnessed waves of digitalization and its diffusion into our lives. Nowadays, almost all devices are connected to the digital world. Unwittingly we have left digital traces of our daily activities and may be unaware that those traces have completely changed the economic and financial current digitalization in the economic and financial world changes the behavior of economic agents. Nowadays, people increasingly demand fast, affordable, and safe financial services.

9 The interaction between economic agents, both as a consumers and factors of production, shows an unusual pattern. The world is heading towards a new normal that is no longer akin to what we have already perceived. Digitalization becomes a new genrethat we need to discern and maximize its benefits without losing any innovation is an agnostic solution that makes financial services in hand no longer as a mere jargon. Now everyone, male and female, young and old, rich and poor, with or without a bank account, has equal access to the financial world, only by resorting online application on their smartphone.

10 Digitalization opens wide doors for economic and financial inclusion opportunities for all, including the unbanked and MSME segments. This is good news for Indonesia , where 51% of the adult population has not been exposed to banking , digitalization also changes the overall risk landscape at the same time. Cyberattack, big tech, cryptoasset and many other unfamiliar terms are now emerging as a new scourge for economic, monetary and financial system stability. The presence of risk in a new dimension calls for policy innovation from the authorities.