Fintech Law and Regulation in Indonesia

Fintech Law and Regulation in Indonesia


The existence and development of fintech in Indonesia that lay on the ‘internet of things’ should base on the Government Law and Regulation.


The fast-growing of fintech in Indonesia has a potency to erode the conventional banking market. Thus, it is not only happened in Indonesia, but it is also happening around the globe. In Asia itself, the fintech industry has reached 2.500 company through start-up.

As a new industry that arises from the development of technology, the legal aspect of fintech has still developed and does not fit with the previous regulations. This phenomenon occurs in most of the world legal system. Moreover, the existence of fintech that lay on the ‘internet of things’ that cause this industry able to operate across jurisdiction borders is making it more complicated.

However, since many fintech industries in Indonesia developed from a start-up company and needed the investment badly from investors, they want a guarantee that this industry is legal based on the country regulations. Moreover, to also achieve the consumer trust regarding consumer protection, some of the fintech products need recognition from the regulator.

Two government institutions have the authority to manage fintech in Indonesia, the Central Bank (Bank Indonesia) and the Financial Services Authority (OJK). These two institutions have issued several regulations related to fintech. Those regulations are:


Bank Indonesia Regulations related to Fintech in Indonesia

  1. Bank Indonesia Regulations (PBI) No.18/40/PBI/2016about the Organizing of Payment Transaction Process
  2. Bank Indonesia Regulations (PBI) No. 19/12/2017 about the Organizing of Financial Technology.
  3. The Regulations of Governor Board Member (PADG) No.19/14/PADG/2017 about the Limited Trial Space (Regulatory Sandbox) of Financial Technology.
  4. The Regulations of Governor Board Member (PADG) NO 19/15/PADG/ 2017 about the Procedures of Registration, Information Delivery, and the Monitoring of Financial Technology Organizer.

Through the regulations, PBI No.19/12/PBI/2017, The Central Bank has given fintech definition that they are using, as well as the fintech categories and its criteria.



The Definitions of Financial Technology/ Fintech

Article 1:

Financial Technology is the using of technology in the financial system that results in products, services, technology, and/or new business model also impacted in the monetary stability, financial system stability, and/or the efficiency, the continuity, the security, and the reliability of payment system.


OJK Regulations related to Fintech in Indonesia

  1. The Regulation of Financial Services Authority (POJK) No. 77/POJK.01/2016about Money Lending Services based on Information Technology.

This regulation aims to protect the consumer related to the fund and data security, as well as avoiding money laundry practice and terrorism funding. OJK obligate the IT company that provide money lending services (P2P lending) to conduct registration for its membership. The fintech company should also create the escrow account and virtual account in Indonesia’s banking system, as well as put their data center in Indonesia.

The fintech company should attach their proof of capital ownership minimum IDR 1 billion during the registration process. OJK assert in article 3 that the share ownership by foreign people or foreign institution, direct or indirect, is maximum 85% of the total shares. Therefore, foreign fintech that want to operate in Indonesia should divest their ownership shares to the maximum of 85%.

In this regulation OJK also limited the maximum amount of money lending up to IDR 2 billion for each debtor. OJK hopes this policy able to make fintech company in Indonesia that provides P2P lending contribute to the escalation of funding distribution for small-medium enterprise (UMKM) throughout the country.

That superfast development of fintech in Indonesia should become the special attention from the government. The government needs as soon as possible to create an umbrella law for protecting the financial system in Indonesia. The law will protect the consumer as well as the fintech industry itself.



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