Financial Crime World

Indonesia’s Central Bank Takes Measures to Combat Credit Card Fraud

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Bank Indonesia Introduces Regulations to Mitigate Risk of Payment System Fraud

JAKARTA, INDONESIA - In an effort to reduce the risk of payment system fraud in Indonesia, Bank Indonesia has introduced several regulations aimed at preventing and mitigating card-based payment instrument fraud.

Credit Card Fraud on the Rise

According to statistics provided by the Australian Payments Clearing Association (APCA), Indonesia is one of the countries where credit card fraud is on the rise. To combat this issue, Bank Indonesia has issued a range of regulations, including:

  • Bank Indonesia Regulation Number 7/52/PBI/2005: Sets out minimum standards for card fraud prevention activities.
    • Requires issuers to prevent and minimize card fraud
    • Preserve public trust
    • Establish a secure technology infrastructure
  • Subsequent amendments: Strengthened regulations to ensure compliance with international standards

Regulations Mandate Chip Technology and EDC Improvements

In addition to these regulations, Bank Indonesia has mandated the implementation of:

  • Chip technology: With the ability to store and process data
  • Electronic Data Capture (EDC) devices: Improved transaction processing systems
  • Deadline for conversion to chip technology: January 31, 2009

Experts Warn of Potential Offence Displacements

Despite these efforts, experts warn that credit card fraud offenders may shift their focus to other schemes, such as:

  • Card-not-present fraud
  • Application fraud
  • Targeting other card-based payment instruments, such as ATM cards

As a result, Bank Indonesia is urging the industry to remain vigilant and prepared for potential offence displacements.

National Standard for Chip-Based ATM/Debit Cards

The bank has also mandated the National Payment System Communication Forum (FKSPN) to formulate a national standard for chip-based ATM/debit cards in Indonesia, which will help to reduce the risk of payments fraud.

Industry Experts’ Views

Industry experts agree that the regulations are a step in the right direction, but more needs to be done to combat payment system fraud. “The regulations are necessary, but we need to continue to monitor and adapt to new threats,” said one expert.