Jalin - Member of Telkom Indonesia - LINK Debits Switching

Gold Stevie Award Winner 2018, Click to Enter The 2019 Asia-Pacific Stevie Awards

Name of Organization / Company: Jalin - Member of Telkom Indonesia
Category: P01 - P15 - Award for Innovation in Product Design and Development > P04. Award or Innovation in Consumer Electronics & Information Technology

Entry Title: LINK Debits Switching: Indonesian Nation Payment Gateway


The market size of Indonesia debit payment, i.e. purchasing transaction via EDC, is estimated at 2,518 billion Rupiah (Bank Indonesia – Indonesia Central Bank, 2016). Roughly 10% - 20% of all transactions are categorized as interbank debit transaction, commonly named as off us transaction in which banks’ customers swipe their debit card in EDC machine owned by other banks. Until recently, these transactions have been routed via international switching principals (e.g. Visa and Mastercard) which forces all transaction data to be processed out of country before eventually being sent back to local acquirer (EDC’s owner).

This condition leads to several disadvantages that do not only affect payment agencies but also potentially hamper government program regarding the promotion of less cash society initiative. The first disadvantage is related to potential fraud of data access due to uncontrolled access as the servers are deployed outside Indonesia. Secondly, as the transactions are processed through international switching principals, they have authority to defined Merchant Discount Rate (MDR) which is currently agreed at 2-3%. This high fee may prevent merchant to adopt debit payment system and eventually hinder the successful of the government initiative.

Jalin Pembayaran Nusantara (Jalin), one of Telkom Indonesia subsidiaries, has acquired licenses as switching agencies, Jalin delivers interbank debit payment service, namely Debit Link, which adopts interconnection and interoperability concepts so that any banks registered as Jalin’s member can perform interbank transaction to other bank registered in other switching agencies.

Debit Link service has been running well since October 2017 indicated by number of transactions that have been exceptionally increased with more than 2 million transactions being routed from Jalin in last 6 months. During two months after its first launch, the transactions advanced approximately 1,655% from 5,523 into 96,941 transactions. The number kept rising and successfully reached 538,932 transactions in the end of 2016. Furthermore, Jalin could maintain satisfying record in which the company has successfully collected more than 1.5 Million transactions during February 2018.

In accordance with this growth, Jalin’s merchants/partners also has expanded simultaneously. In October 2017, the transactions were only performed at 257 merchants while in February 2018, Jalin routed debit transaction in 440,370 merchants all over Indonesia with the average amounts were accounted at 500 thousand rupiah. This results has increased company’s confidence regarding its contribution to less-cash society initiatives.

Jalin along with banks with domestic switching agencies and banks with core capital of at least 30 Trillion Rupiah launched an initiative to establish Indonesian payment gateway known as Gerbang Pembayaran Nusantara (GPN) project. This project aims to integrate all stakeholders in the domestic payment industry (financial institutions – bank and non-bank, switching agencies, standard boards, and services boards – settlement agencies) into an integrated payment system that will enable interconnection and interoperability among institutions. By implementation interconnection concepts, all switching systems from four local agencies are connected. Therefore, it is possible for bank/nonbank institutions to perform cross-transaction regardless to which switching agencies they are associated to.

Meanwhile, interoperability allows debit cardholders to do transactions in all merchants where the EDCs connected to GPN system.

Future business for Link Switching Service will cover not only payment transaction using debit/credit card but will expand to electronic money. In addition, new financial technology also encourage card less method. Mobile application using QR Code will be one of the new way that is believed to be easier and faster and have prospective future. These innovations will boost Jalin to come with various business idea that can be adopted as company revenue source to maintain company sustainability in the future.