Impact of Using Non-Cash Payment Instruments and E-money Against Economic Performance

According to Law No. 23 of 1999 concerning Bank Indonesia, as lastly amended by Act No. 6 of 2009, one of the tasks of Bank Indonesia is to regulate and maintain a smooth payment system. In carrying out these tasks, Bank Indonesia is authorized to implement, give approvals and permits for the organization of payment system services. One component of the payment system is a payment instrument that consists of a cash payment instruments and non-cash. In the beginning, people only knew cash payment instruments, namely using currency. However, as technology develops, non-cash payment instruments are starting to develop, including Card-Based Payment Instruments (APMK) and electronic money. Bank Indonesia continues to improve the electronification of payment transactions and improve payment system infrastructure in all regions of Indonesia.

              Efforts to develop non-cash and electronification financial services conducted by Bank Indonesia in the Province of Bali include:

1.      Application of elektronifikasi highway 100% in October 2017. This effort is in accordance with the mandate of the president of Republic Indonesia are set forth in the regulation's Minister PUPR No. 16 / PRT / M / 2017 dated 12 September 2017 concerning Non-Cash Toll Transactions on Toll Roads .

2.      In collaboration with several stakeholders in exploring several Bank Indonesia electronification programs with PT. Angkasa Pura in realizing electronification program on payment of motorized parking at I Gusti Ngurah Rai airport. The electronification program is packaged in a Bali Card , an electronic money card for tourists that can be used for various purposes such as payment of transportation and entrance fees for tourist sites, as well as other purposes. With Balinese nuanced card design, tourists are expected to be able to use the card as a souvenir.

3.      An electronification program has also been carried out on crossing ticket payments at Gilimanuk Port and Benoa Port ( e-Port Card ). This e-Port Card can also be used to shop at tenants / merchants in Benoa Port in addition to payment when entering the port.

4.      In the transportation sector, the electronification program is carried out by targeting one of the transportation service providers, namely Blue Bird Group Bali. People who use public transportation services, especially Blue Bird taxis, can enjoy non-cash payments using CBPIs and electronic money.

5.      Encouraging electronification of payment for entrance tickets of attractions, especially in Tabanan Regency and Pandawa Beach tourist areas as well as payment for vehicle parking in shopping centers.

6.      Implementation of non-cash in government, has also been implemented, both for the revenue or expenditure of the Province of Bali. For regional acceptance, the application of non-cash has been implemented for regional revenues, particularly regional taxes / levies, PBB, BPHTB and the hotel, entertainment and restaurant (PHR) industry. This non-cash receipt uses a billing system model that can be paid via ATM or payment points. (with BPD Bali as an aggregator).

              The provider of APMK as a non-cash payment instrument will have an impact on reducing the demand for money in the community. APMK is not part of the amount of money in circulation, but it can affect the demand for money, specifically reducing the demand for currency. Decrease in money demand will cause a decrease in interest rates on the money market, because people will choose to use APMK which is accompanied by saving money in the same bank. This will encourage more competitive borrowing costs, thereby increasing company investment and increasing real output and can further drive economic growth. Use of total non-cash payments will me each reduction in transaction costs and the cost of waiting in the payment transaction in cash. This is because with non-cash payment instruments, payment transactions can be carried out faster. In addition, there is the potential for additional income in the form of interest income from balances deposited by customers in banks connected to APMK. This condition will be to encourage public consumption and will further increase economic growth. . 

              The provider of APMK services and e -money will benefit from additional revenue in the form of fee-based income, which the customer APMK and e-money will be charged the administrator each month or inter-bank transfer fees. In addition, they will also get additional income from the minimum remaining balance that cannot be refunded by their customers. The provider of APMK services and entrepreneurs whose businesses affiliated with APMK or e-money will get an increase in sales and profit, because people's preferences are now inclined to transact with APMK and e-money. This will lead to increased business expansion and investment for the company. Thus, can have dual effects from the use of APMK and e-money in the community, namely from the consumer side of APMK and e-money services as well as from the producer side, namely the service provider of APMK and e-money. This will cause an increase in consumption and investment, thereby increasing real output and income. If income rises, the demand for money for transaction and precaution will increase, according to the motive for holding money. In the use of APMK and e-money, the demand for money will not increase, with currency held by the public in their wallets. This changes are application because the public already has APMK and e-money, so they will tend to be place money in APMK accounts and e-money which will reduce demand of money in cash. In the APMK service provider bank and e-money, there will be an excess of funds, so that it can be allocated for credit needs with loan costs in the form of interest rates that tend to fall. In this condition, an increase in income will not increase money demand and interest rates, in fact what happens is the opposite.

              In the short term, growth in the money will directly to an increase in real output or economic growth, assuming that the rotational speed of money relati f constant. However, if there are innovations in non-cash and e-money payment tools , there will be an increase in the velocity of money. These conditions should encourage the Bank Indonesia more active monitoring of the increase in the speed of circulation of money, because it would complicate the Bank Indonesia in achieving the inflation target set by the government. Bank Indionesia also need to sharpen the transmission of monetary policy that has a time period that relative gathering is to speed up the effects of monetary policy is conducted, so that if there are changes in the velocity of money will be returned BI, so as to achieve the inflation target and economic growth set by the government as well as keep economic stability. Bank Indonesia also plays a role in working with the Financial Services Authority (OJK) in monitoring changes in shifting people's preferences in the use of APMK and e-money. If there is a rapid development of e-money, so user APMK services switch to e-money is feared will happen liquidity risk reduction, because the kites will APMK transfer their money into an account which reduces the impact of savings in banks. This should ultimately be observed and anticipated by BI, so that the shift in the use of these funds will not affect banking liquidity.

REFERENCE

Bali Province Bank Indonesia Representative Office, 2018, Bali Provincial Regional Economic and Financial Study , Denpasar             

Warjiwo Perry (Ed.), 2004, the Bank I ndonesia, the Central Bank of the Republic of Indonesia An Introduction , Center for Education and Studies Kebanksentralan (PPSK) Bank Indonesia, Jakarta.