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Bank Indonesia unveils latest digital payment system
Digital payments have gained substantial traction in Indonesia. It is now extensively used by more than half of its population. The country has become a leader in adopting digital payments at the national level.
According to a recent survey, Indonesia’s e-commerce sector is expecting 50% year-on-year growth, with its value set to reach US$35 billion in 2020.
With that, Indonesia’s central bank, Bank Indonesia (BI), launched the country’s first real-time payments infrastructure, BI-FAST.
The infrastructure is driven by ACI Worldwide, a leading global provider of real-time payments and digital payment solutions.
BI-FAST facilitates retail payment services for the public and is central to IPS 2025. This aims to transform its payment infrastructure, integrate its digital economy and finance sector, and respond to public demands for a fast, easy, safe, affordable, and reliable payment system.
Digital Payment system BI-FAST supports a robust and competitive financial system
BI-FAST will provide the infrastructure to support a robust and competitive financial system while enhancing Indonesia’s regional hub for trade and investment.
This is part of Indonesia’s ongoing digital modernization initiative which is to create an end-to-end integrated environment for the payment system industry, digital banking, fintech, e-commerce, consumers, and the country’s financial-economic recovery.
It is a testament to the government’s efforts to encourage innovation and create an enabling environment for fintech firms that seek to drive financial inclusion through technology.
Implementation in nine months
Bank Indonesia and ACI implemented BI-FAST in less than nine months, making it one of the fastest countrywide implementations on record.
The vast undertaking will incorporate 135 banks, merchants, and payment service providers, making it one of the world’s most significant real-time payments initiatives.
Phase one of the national initiative is already live with more than twenty banks across the country, providing participating institutions with access to a series of critical services, including:
- 24/7 real-time credit transfers with real-time transaction settlement at bank & customer level
- Unique identifiers (proxy addresses) to simplify, secure and facilitate payments
- Integrated real-time fraud detection
“ACI is proud to help drive BI-FAST and Indonesia’s bold payment transformation,” said Leslie Choo, managing director – APAC, ACI Worldwide.
“Together, ACI and Bank Indonesia have created one of the most secure and future-proof real-time payment systems in the world, one that will help accelerate Indonesia’s digital economy and bring millions of unbanked citizens into the formal financial sector,” added Choo.
Among the initiatives of the Indonesia Payment Systems Blueprint 2025 include:
- Reinforcing the integration of the national digital economy and finance.
- Assuring interlink between fintech and banks
- Striking a balance among innovation, consumers protection, integrity, and stability, as well as fair competition
- Safeguarding national interest on cross-border use of digital economy and finance through the obligation of domestic processing for all onshore transactions and domestic partnership for all foreign players.
As digitization, technology, and globalization are rapidly changing the way people live, many Southeast Asia countries have accelerated their digital banking adoption by making online transactions available to citizens.
Consulting firm Roland Berger expects banks in the region to reduce the number of their branches by 18% by 2030. The reductions are forecast to happen in Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand.
Indonesia is the latest in a series of Southeast Asian countries to upgrade its national payments infrastructure to drive digital economies and accelerate growth.
Source: https://techwireasia.com/2022/01/bank-indonesia-unveils-latest-digital-payment-system/