Payment License in Indonesia: Getting a PSSP License in Indonesia

A payment service provider license is one of today’s most popular services. Lithuania and Great Britain are the top payment licensing destinations in Europe while Singapore and Hong Kong are the most sought for in Asia.

The market is growing, and many are considering new jurisdictions and non-standard markets. Indonesia could be one of those. This article is about obtaining a payment license (PSSP) in Indonesia.

PSSP License in Indonesia: Regulations

The Government of Indonesia openly supports the financial technology market. A new regulation for Payment System Service Providers – #18/40/PBI/2016 – was adopted by the Bank of Indonesia in 2016.

Peculiarities of the PSSP License in Indonesia

The license allows the following types of activity:

• Principals
• Switching Providers
• Issuers of bank cards; credit and debit cards; e-money
• Acquirers
• Payment Gateway Providers
• Clearing Providers
• Fund Transfer Providers
• Electronic Wallet Providers

What is different about Indonesia’s regulations is that for each type of operations one needs to obtain a separate license which enforces specific requirements. For instance, only a bank can issue cards, and multi-currency exchange can only be done a bank or a non-banking institution which fully belongs to a citizen of Indonesia.

Foreign Ownership Restrictions

In the case of a PSSP, at least 80% of company shares must be held by Indonesian residents and/or by Indonesian legal entities. Both direct and indirect ownership is taken into account.

E-Wallet Services

Only companies covering (or intending to cover) at least 300,000 users are required to get the e-wallet license from the Bank of Indonesia.

What is the definition of active users? Those are e-wallet users making regular payment transactions with their e-wallet and/or at least once per month.

If the user count exceeds 300 thousand, one needs to obtain a license from the Bank of Indonesia. As of today, there are 37 e-wallet operators licensed by the Bank of Indonesia. According to the data available, only 10 of them started operating in 2019.

The minimum authorized capital for this type of activity is IDR 3 billion (around EUR 174,458.62).

PSSP License in Indonesia and Cryptocurrency

All PSSPs are prohibited to process payment transactions with the use of virtual cards.

The definition of virtual currency includes digital money not subject to monetary control acquired through mining, purchase, or transfer of Bitcoin, BlackCoin, Dash, Dogecoin, Litecoin, Namecoin, Nxt, Peercoin, Primecoin, Ripple, and Ven.

Payment Transaction Processing Within the Country

Any payment transactions involving a payment instrument by an Indonesian issuer or any payment services offered by a payment service provider and carried out in the territory of Indonesia must be processed within the country.

Fintech lawyers at SBSB have been obtaining payment licenses in various jurisdictions for over 8 years now. Join our Telegram chat or email us at info@sb-sb.com for a free top-quality consultation.