University graduate Geraldi Dwitya Pradipta, 23, previously had only one electronic money card. However, he claimed that the card use had been so beneficial that he purchased two more for his family.

“I always use e-money cards for transactions at toll gates because they are very useful. I can use them at both automatic gates and manual gates,” Geraldi said recently.

For Petrus Sian Edvansa, also 23, an e-money card provides him with additional convenience when paying parking fees at shopping centers or simply on the street.

Geraldi and Petrus, and other users like them, expect any breakthrough in the country’s payment systems to make their daily lives even more comfortable and their financial transactions easier.

State-run lenders under the Association of State-Owned Banks (Himbara) claim they can meet this demand.

The banks — comprising Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Tabungan Negara (BTN) — signed a memorandum of understanding (MoU) last week with state-owned telecommunications firm Telkom on the establishment of the country’s first domestic payment principal company.

The future company, whose formation has been approved by Bank Indonesia (BI), will facilitate electronic transaction switching between state-owned banks that currently dominate more than 50 percent of nationwide banking transactions, making transactions among them faster.

According to Himbara’s calculations, a state-owned switching company will lead to savings in ATM investment and maintenance of Rp 6.8 trillion (US$510 million) per year.

With lower costs, banks can reduce transaction fees charged to consumers and slash their overall expenses. Himbara claims that eventually, they can also reduce lending in the future.

Gatot Trihargo, State-Owned Enterprises (SOE) Ministry’s deputy for financial services, said the state banks would not see a significant decline in their fee-based incomes after they cut related fees, but could generate higher revenues instead as transaction volume is predicted to rise.

Himbara is currently finalizing an ongoing integration of its 10,000 ATMs and 60,000 electronic data capture (EDC) machines under one single ATM brand called “ATM Himbara Link”, which offers lower fees for interbank transfers and cash withdrawals. The process is expected to be complete by year-end.

The integration will use Link, which is an existing switching system owned by Sigma Cipta Caraka, a second-tier subsidiary of Telkom.

In parallel with the process, Telkom will provide temporary equity participation for the new switching company until the SOE Ministry realizes its plan to establish a financial holding company that will manage the four state banks. By then, the holding company — to be represented by state investment company Danareksa — will take over Telkom’s stake.

“The process to establish a company needs roughly two-and-a-half months. At the same time, we will calculate the total investment needed until the company is taken over by the future holding,” said Telkom president director Alex J. Sinaga.

In the long run, the new company will have its system interconnected with other switching firms, regional development lenders (BPD) and private-sector banks. (mos)

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