The National Payment Gateway signals major progress in Indonesia

Photo by Pruculy Yongki. Taken from flickr

Indonesia is catching up with other ASEAN nations. The Indonesian National Payment Gateway represents a landmark step in streamlining electronic payments.


On 4 December 2017, Bank Indonesia (BI) launched its National Payment Gateway (NPG). The NPG is a system which provides a shared payment infrastructure and creates a nationally integrated electronic payment channel.

A consortium called PT Penyelengara Transaksi Elektronis Nasional will manage and operate the infrastructure sharing. Four Indonesian interbank switching companies established the consortium; PT Artajasa Pembayaran Elektronis, PT Rintis Sejahtera, PT Alto Network and PT Jalin Pembayaran Nusantara.

The establishment of BI’s National Payment Gateway

Since the 2013 memorandum of understanding (MoU) between the three Indonesian interbank network providers, Indonesian banking customers have been able to process interbank transfer at any automated teller machine (ATM). However, the transaction cost between different banks remained high due to the incompatibility of the different payment systems.

To deal with these issues, BI has launched the National Payment Gateway. On 21 June 2017, BI fueled controversy among foreign investors. It issued a regulation requiring the NPG to process all electronic payments. Switching companies at least 80% domestically owned would process all electronic payments. This concerned foreign investors who believed the regulation was discriminatory. They feared the switching companies would not be able to handle the volume of electronic payments that required processing.

Picture from Deal Street Asia

The National Payment Gateway will help reduce transaction cost

BI’s National Payment Gateway will connect different payment channels and simplify the electronic payment process. This will lower the cost of interbank transactions in Indonesia. Four main e-money issuers PT Bank Mandiri, PT Bank Central Asia (BCA), PT Bank Rakyat Indonesia (BRI), and PT Bank Negara Indonesia (BNI) have already signed an agreement for their e-money interoperability.

“Usually banks charge a 2 to 3 percent merchant discount rate if a customer uses another bank’s card, but now the rate is only 1 percent with the infrastructure sharing,” said BI Governor Agus Martowardojo at the opening ceremony of the National Payment Gateway. Customers will be able to withdraw money from ATMs with lower transaction fees. Meanwhile, BI is urging foreign payment systems such as Visa and Union Pay to join its National Payment Gateway.

Indonesia is trying to catch up with other nations

Indonesia has long lagged behind other ASEAN nations. Countries such as Singapore, Thailand, Malaysia had already created their own gateways. But Indonesia is catching up with them. Regulations will continue to improve. There is still some way to go, but the creation of the NPG signals a step towards a more streamlined, fully integrated Indonesian payments system.