The rapid digital transformation in the financial sector has significantly accelerated the growth of technology-based financial services, one of which is the Payment Service Provider (PJP). PJP companies play a crucial role in facilitating financial transactions between businesses and consumers through digital payment instruments such as electronic money, digital wallets, and payment gateway systems. To maintain the stability of the national payment system and ensure consumer protection, Bank Indonesia (BI), as the monetary authority, strictly regulates the establishment and operations of PJPs through a series of regulations.

In Indonesia, the establishment and operation of PJP companies are strictly regulated and supervised by Bank Indonesia under Bank Indonesia Regulation No. 23/6/PBI/2021 on the Operation of Payment Service Providers (PBI 23/2021), which replaces previous regulations. This regulation focuses on consumer protection, transparency, and compliance with applicable laws in payment systems and financial services. Article 2 paragraph (1) of PBI 23/2021 stipulates that PJPs may conduct the following activities:

• provision of Source of Funds information;
• payment initiation and/or acquiring services;
• administration of Source of Funds; and/or
• remittance services.

Any party intending to operate as a PJP must obtain a license from Bank Indonesia. Licenses are issued under three licensing categories, determined by Bank Indonesia. Applicants must fulfil licensing requirements that cover aspects of institutional structure, capital and financial soundness, risk management, and information system capability.

The licensing requirements for PJP include several key aspects. In terms of institutional requirements, this covers the composition of share ownership and ownership structure. For the capital and financial aspects, it includes the minimum paid-up capital, feasibility analysis, and business projections. The risk management aspect must address legal risk, operational risk, and liquidity risk. Meanwhile, the information system capability is assessed at a minimum through the following:

• security control procedures for information system protection;
• fraud management system;
• information system audits and security testing; and
• the level of capability and availability of the information system.

Applicants for a PJP license must be either banks or non-bank entity. Non-bank applicants must be in the form of a limited liability company (PT). Furthermore, PBI 23/2021 requires that non-bank entities must have at least one Director domiciled in Indonesia. Any board member residing outside Indonesia must still carry out their functions, duties, and responsibilities effectively.

In addition, Bank Indonesia also regulates the ownership structure for prospective non-bank PJPs. As stipulated in Article 19 paragraph (2) letter a of PBI 23/2021, at least 15% (fifteen percent) of shares must be owned by Indonesian citizens and/or Indonesian legal entities. Based on this provision, if a foreign party wishes to become a prospective PJP, the maximum allowable share ownership is 85% (eighty-five percent). Furthermore, Article 20 paragraph (1) letter a of PBI 23/2021 requires that at least 51% (fifty-one percent) of voting shares must be held by domestic parties, i.e., Indonesian citizens and/or Indonesian legal entities. Therefore, foreign parties can hold no more than 49% (forty-nine percent) of the voting shares in a prospective PJP.

Meeting all these requirements makes the establishment of a PJP not only a promising business opportunity in the digital era but also a vital step toward supporting financial inclusion and transactional efficiency in society. A deep understanding of the licensing rules, ownership structures, and governance standards is essential to ensure a smooth setup and operation of PJPs in Indonesia.

Therefore, business actors planning to enter this sector must plan carefully and understand the applicable legal aspects thoroughly. In this context, close collaboration between regulators and industry players is crucial to foster a secure, inclusive, and sustainable digital payment ecosystem in Indonesia.

If you have further inquiries regarding this topic, Schinder Law Firm has extensive experience handling corporate and financial regulatory matters. Our team of seasoned corporate and civil lawyers stands ready to assist. Please contact us at info@schinderlawfirm.com for further consultation.

Author:
Dewi Susanti