In June 2017, Bank of Indonesia issued a new regulation on the National Payment Gateway (NPG). The regulation has a transition period of one year. The NPG consists of switching and services that integrate all payment instruments and channels nationally. The regulation mandates processing of every domestic payment transaction through the NPG. The central bank aims to achieve interoperability with national payment systems, including switching interconnection and interoperability of payment channels and instruments. A second phase, currently in development, will not only enable smoother inter-bank transactions, but will also provide payment facilities for the bills of 20 main utilities, including electricity and telecoms providers. The regulation aims to increase use of digital payments instruments as part of the government’s efforts to facilitate cashless payments.
Traditional banks must evaluate their place within the payments ecosystem and be open to partnering with FinTechs and third-party developers to drive value collaboratively.
Structural changes are spurring payments industry participants to evaluate the future of the business as well as their role in the months and years ahead.
The Payment Services Directive 2 or PSD2 has been in full force for more than six months, and its impact is being felt not just in the European Union, but across the globe – with several markets, such as Singapore, Australia, and Nigeria, as well as Hong Kong announcing open banking initiatives inspired by the PSD2