Bank Indonesia, the country's central bank, has ordered Go-Jek to stop all payment services through its digital wallet service Go-Pay that use static and dynamic Quick Response codes, or machine-readable matrix barcodes, that are used for offline merchant transactions under the false pretense of operating under a pilot project. (JG Photo/Lidya Caroline)
Bank Indonesia Orders Go-Pay to Stop Using QR Codes, Citing Regulatory Breach
BY : MUHAMAD AL AZHARI AND HERU ANDRIANTO
JANUARY 15, 2018
Jakarta. Bank Indonesia, the country's central bank, has ordered Go-Pay, the integrated digital wallet service of Go-Jek, to stop all payment services that use static and dynamic Quick Response codes, or machine-readable matrix barcodes, that are used for offline merchant transactions under the false pretense of operating under a pilot project.
Go-Pay is one of the fastest growing payment services in Indonesia thanks to the company's popular ride hailing and food delivery services.
According to a letter from Bank Indonesia dated Jan. 11, a copy of which was seen by the Jakarta Globe on Friday (12/01), the regulator ordered Go-Pay to stop all activities using QR codes.
Go-Pay must comply with the order by Jan. 18. Sempa AH Sitepu, head of Bank Indonesia's Financial System Surveillance Department, signed the letter.
The company's compliance will mean that Go-Jek users will be unable to process payments outside of the Go-Pay platform for offline merchants.
According to the letter, Go-Pay has been identified to have launched a full "roll out" of its services, whereas the regulator was only informed it was a "pilot project."
In the letter addressed to the board of directors of Dompet Anak Bangsa, the company behind Go-Pay, the central bank highlighted that it received a number of notifications stating that the digital wallet service was considered only a pilot project.
Last year, in a meeting between the central bank and one of the board of directors of Dompet Anak Bangsa, the service was still considered a pilot project.
However, the letter said that according to the regulator's evaluation, Go-Pay's activities on the ground do not fit the criteria of a "pilot project" but should rather be considered a full roll out of a product launch. The letter ordered Go-Pay to follow procedures to secure permits from the central bank for a full product launching.
"Termination of such activities should be reported to Bank Indonesia by attaching evidence" of documents that have been verified by the company's internal audit and compliance unit, the central bank's letter said.
Agusman, the head of Bank Indonesia's communications department, confirmed the letter's contents.
"What we request to stop is Go-Pay's services that uses QR codes," Agusman wrote via WhatsApp to the Globe, adding that other Go-Pay services can still operate as normal.
He said the central bank's request to stop Go-Pay's QR code services had been discussed with a director at Go-Pay near the end of 2017 and that "Go-Pay agreed to stop it."
The Globe's sources inside Bank Indonesia said that regulators may evaluate whether further sanctions against Go-Pay would be necessary in light of its recent regulatory violations, which include but are not limited to possible breaches of the country's anti-money laundering law, customer data and privacy and account security issues.
According to Bank Indonesia regulation No. 18/40/PBI/2016, any payment services in the country must secure the central bank's approval with regards to its operations, safety, reliability of its system and implementation of risk management, as well as consumer protection.
Budi Gandasoebrata from Go-Pay did not respond to the Globe's inquiry. Rindu Ragilia, the public relations manager of Go-Jek Indonesia, also did not respond to questions from the Globe.