Deadline Looming as New BI Regulation Requires Payment System Providers in Indonesia to Allocate Human Resources Development Funds

On July 9, 2024, Indonesia’s central bank, Bank Indonesia (“BI”), issued a regulation setting out a framework to harmonize the development and implementation of competency standards in the field of payment systems.

BI Regulation No. 5 of 2024 regarding the Standardization of Competencies in the Payment Systems Field (Standardisasi Kompetensi di Bidang Sistem Pembayaran or “SK SP”) (“BI Reg. 5/2024”) replaces BI Regulation No. 21/16/PBI/2019 regarding the Standardization of Competencies in Payment Systems and Rupiah Management (“BI Reg. 21/2019”).

While the main SK SP framework established under BI Reg. 21/2019 has been retained, the new regulation introduces numerous changes of note for companies in the payments sector. Aside from omitting the term “rupiah management” (pengelolaan uang rupiah) and expanding the scope of the regulation, BI Reg. 5/2024 introduces the obligation for SK SP actors to provide sufficient funds for the development of their human resource competencies.

The regulation also introduces several new provisions including those on new administrative sanctions for SK SP actors, a broader scope of regulation and payment system activities, more definitive criteria for recognizing professional associations and industry associations, and the expansion of collaborations and oversight mechanisms.

Development of Human Resources

Pursuant to BI Reg. 5/2024, SK SP actors – payment service providers, payment system infrastructure providers, rupiah management service providers, and non-bank foreign exchange business activity providers – must allocate sufficient funds to develop and strengthen their human resource competencies.

While the regulation does not specify the exact amount of funds required, it mandates that SK SP actors determine the funds required for said development and subsequently report to BI on their funding provision plan as well as its realization.

In determining the required funding for HR development, SK SP actors must consider the scope of their payment system activities, the number of human resources, the cost of Competency-Based Training Programs in Payment Systems (Pelatihan Berbasis Kompetensi Sistem Pembayaran) or payment system competency certification, as well as provisions regarding the allocation of funds to develop human resources, as regulated by the competent authority. BI Reg. 5/2024 does not specify the competent authority regarding this matter.

Deadline for HR Funding Plan

SK SP actors must be mindful of the December 13, 2024, deadline under Article 12(6) of BI Reg. 5/2024 to submit their funding plan for 2025. Non-compliance with this obligation may result in the imposition of administrative sanctions by BI, as outlined in Article 12(7). These administrative sanctions include:

1. Written warning;
2. Postponement in the granting of permits, approvals for the development of activities, products, and cooperation in payment system activities, and/or the postponement of participation in BI’s payment system;
3. Temporary, partial, or complete suspension of payment system activities including the implementation of cooperation; and/or
4. Revocation of payment service provider permit, determination as a payment system infrastructure organizer, rupiah processing service organizer permit, or permit as a non-bank foreign exchange business activity organizer.

Further provisions regarding the above funding obligation and the imposition of administrative sanctions are to be regulated by the Board of Governors of BI.

In addition to the above funding obligations applicable to SK SP actors, BI Reg. 5/2024 introduces numerous provisions aimed at ensuring the development of human resources in the payment systems sector. These provisions range from the establishment of qualification thresholds for employees of SK SP actors to the factors that shall be considered by Payment System Professional Certification Institutes (Lembaga Sertifikasi Profesi Sistem Pembayaran) for the recognition of overseas professional certificates.

Conclusion

Collectively, the changes stemming from the issuance of BI Reg. 5/2024 mark a significant advancement in the regulatory framework governing the payment systems sector, particularly in the development of human resources. The introduction of the obligation to allocate funds for the development of SK SP actors’ human resources underscores BI’s commitment to ensuring the quality of individuals in the payment systems sector. This is a step toward enhancing the payment systems industry consistent with the issuance of Law No. 4 of 2023 regarding the Development and Reinforcement of the Financial Sector.

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