AS payments become more digitalized, cyber security is paramount. Bank Indonesia (BI) continues to campaign for a ‘”less-cash society” with the recent launch of a centralized QR standard and further development of the national payment gateway, implementing “international security standards” to contain cybersecurity risks.
Starting January next year, the Quick Response Indonesian Standard (QRIS) will integrate existing QR-based payment apps such as Go-Pay and OVO to boost cashless transactions and promote financial inclusion in the country, said BI payment system policy executive director Pungky P. Wibowo.
“With QRIS codes, there will be no more fragmentation or monopoly of the e-payment system,” Pungky said during a press briefing at BI’s headquarters in Jakarta last Friday.
The integration of the QR payment system into the central bank’s QRIS technology is also needed to encourage micro, small and medium enterprises (MSMEs) to enter the digital market, he added.
As of Friday, there were 38 payment system providers that have begun to use the QRIS. The use of the QRIS code was mandatory and that QR-based payment apps that failed to adjust to the new system by January 2020 as stipulated in BI regulation No. 21/18/PADG/2019 would face penalties.
Pungky added that the central bank has implemented international security standards for QRIS. “The QRIS has two-factor authentication and one-time password [OTP] features as security issues are our main consideration.”
The launch of the central bank’s QRIS is expected to further boost cashless transactions and promote financial inclusion. According to a 2018 study by the World Bank, cashless transactions in Indonesia stood at 10 percent of transactions in the country. BI showed a more optimistic figure as cashless transactions stood at 24 percent of transactions in the same year.
Cashless payments have become a lifestyle choice in Indonesia as shown in the widespread use of credit and debit cards. A 2017 Visa Consumer Paying Attitudes survey found that 76 percent of Indonesians said they could go without cash for a day.
The same study showed that 77 percent of Indonesians wanted cashless payments for all transactions in the next year. Some 40 percent of respondents projected that Indonesia would no longer use cash in the next three years.
Nonprofit organization Communication and Information System Security Research Center (CISSReC) chairman Pratama Persadha said the survey showed that consumers felt comfortable with cashless payments as it provided them with an easy and secure transaction process.
“The growing trend in using cashless payment services is supported by numerous banks and fintech companies that provide e-payment facilities and features such as QR codes and contactless cards,” Pratama told The Jakarta Post.
However, Pratama said cyberthreats could hamper cashless payments as many fintech companies and banking institutions had already fallen victim to cyberattacks, such as the stock exchange Nasdaq and giant retail company HomeDepot in the United States that resulted in millions of consumers’ data being stolen by hackers.
“There were many cases of identity theft by several technology companies in which the public’s data was breached and sold by certain individuals through websites, social media and [online] marketplaces,” he said.
Fintech companies, he added, should comply with Financial Services Authority (OJK) Regulation No. 77/2016, which governs peer-to-peer (P2P) lending.
“The regulation states that the financial service provider should keep personal and financial data a secret.”
Before releasing the integrated e-payment service, in 2017 the central bank launched a national payment gateway (GPN) that aimed to cut the cost of interbank transactions through infrastructure sharing. In 2018, BI claimed that the GPN saved Rp17.75 billion (US$1.24 million) in transaction costs per day.
Recent data released by the central bank showed 44 percent growth for transactions using GPN debit cards year-on-year (yoy) in July this year.
“The growth is a result of Rp6.21 trillion transaction value with 13.6 million total transactions [using the GPN card] in July 2019,” said BI deputy governor Sugeng as quoted by kompas.com, adding that 36.7 million or one-third of debit cardholders in Indonesia possessed GPN cards.
The GPN network is supported by four switching companies: Artajasa Pembayaran Elektronik (ATM Bersama), Alto Network (Alto), Rintis Sejahtera (Prima) and Jalin Pembayaran Nusantara (Link). As payments become more digitalized, cyber security is paramount (awa, The Jakarta Post)