MECNIT 2018 IOP Publishing

IOP Conf. Series: Journal of Physics: Conf. Series 1230 (2019) 012068 doi:10.1088/1742-6596/1230/1/012068

Future Electronics Payment System Model

Selfira, Gabriel Abdillah, Wintari Harahap, Iskandar Muda

Master of Accounting, Faculty of Economic and Business, Universitas Sumatera Utara, Jl.
Prof. TM Hanafiah SH No.12 Medan-Indonesia.

Email: iskandar1@usu.ac.id

Abstract. This paper aims to know information about the differences of Future Electronics
Payment System Model. We describe various systems of electronic payment services, security
issues related to them and the future of the mobile payment mode and overview of e-money.
Payment systems using e-money is a process of modernization of the payment system that is
safe, convenient, and easy which has been developed in several countries in the world.
Electronic Money is essentially cashless money. Its function is a non cash payment instrument
to merchant not to the issuer of electronic money. The data used is secondary data form Bank
of Indonesia Report in 2011-2017. This type of paper is comparative method. Data analysis
used is non parametric of Analysis of Variance (ANOVA). The findings show that therea are
significant differences for each type of payment model. This is indicated that there are
significant differences for each type of payment model and the payment system using e-money
is predicted will grow up fo the future. Payment systems using e-money is a process of
modernization of the payment system that is safe, convenient, and easy which has been
developed in several countries in the world.

1. Introduction
As we all know, the development of information technology is now very fast. Entering the era of
industrial revolution 4.0, the emphasis is on digital economy, artificial intelligence, big data and
robotic, there has been a change in trade in the world, now all in digital form. The world’s financial
system that exists today is the result of the development and evolution a few centuries ago.
Technological development has an impact on all aspects of life including changes of the existing
payment system. Cash payment instrument by using money has begun to shift to non-cash payment
instruments. The development of the use of non-cash payments are not only separated from
technological development but also supported the government's efforts towards Less Cash Society [1].
Non-cash payment instruments is considered to have a role in replacing money as a means of payment.
We don’t realize that sooner or later we will soon need innovation in future payment system,
especially mobile payment. Technological developments will change the way people make
transaction. Transactions that are usually done manually/cash start to change into non-cash payments
[2]. Of course with increasingly advanced technology, the future payment system requires payment
instruments that are innovative, safe, efficient and easy to use by the community. The use of non-
payment cash in Indonesian society is still relatively low compared to other countries Bank Indonesia
has also launched the National Non-Cash Movement (GNNT) since August 14, 2014 in transactions
[3]. Generally, the factors that influence the use of non-cash payment instruments are the existence of
community need, availability of instruments that are safe, fast, and efficient, the number of

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MECNIT 2018 IOP Publishing
IOP Conf. Series: Journal of Physics: Conf. Series 1230 (2019) 012068 doi:10.1088/1742-6596/1230/1/012068

outlets/market players who receive the non cash payment instruments. Based on a survey conducted
by the Indonesian Internet Service Providers Association (APJII) throughout 2016, 67.8% of Internet
users in Indonesia conducted internet activities on a mobile or smartphone basis. This means that the
amount of smartphone usage also indicates the level of use of mobile internet in Indonesia is
increasing. No wonder this then impacts on other technological developments that are mobile as well.
No exception in financial matters. There are so many choices for making financial transactions.
Moreover, the current technological advances are so rapid, making financial transactions easier. Non-
cash payment instruments discussed in this paper are credit cards, ATMs, debit cards and stored value
card/prepaid cards such as e-money.

2. Future Electronic Payment System Model

Electronic payment systems (EPS) have attracted much attention from researchers and information
system designers due to their vital role in modern electronic commerce [4]. Electronic payments are
payments that utilize information and communication technologies such as Integrated Circuit (IC),
cryptography and communication networks [5]. There are many developed and well-known electronic
payments today include phone banking, internet banking, credit cards and debit cards/ATMs. All such
electronic payments, except credit cards, are always directly related to the accounts of bank customers
who use them. In this case, every payment instruction made by the customer, either through phone
banking, internet banking, credit card or debit card/ATM, is always through an authorization process
and will be charged directly into the customer's account.
E-payment systems, as a strategic information system, are considered one of the main components of
economic development, particularly in developing countries, and they greatly help to reinforce the
capabilities and provision of financial services [6]. With the advancement of technology and the need
for practical and inexpensive payment instruments, electronic payment products have been developed
in several countries known as Electronic Money (e-money), whose characteristics are different from
the previously mentioned.

2.1. Credit Cards

A credit card is essentially a line of credit that can be used to borrow money to make purchases,
transfer balances and get cash advances, with the agreement that you will pay back the money
borrowed, plus any interest you owe on it, at a later date. The most commonly used online payment
mode so far was the use of credit cards. Initially, the security concerns hindered in the adoption of
credit cards for making online payments but later with the provision of more secure features to protect
every transaction made, customers developed trust on the use of credit cards. Applicability of credit
cards is a strong factor that contributed to its wide use throughout the world. Credit card companies
have established a wide network for their consumers ensuring a huge user base for a number of
different transactions. However, it is considered a less-suitable method for small businesses and
customers that need to make small payments due to high fees for credit cards [7].
One of the major advantages of credit cards is their easy to use functionality with making online
transactions in no time and from anywhere. These cards are easy to obtain and use as customers don’t
need to purchase any extra software or hardware to work with them. Cardholder authentication
procedure is also simple, with the provision of a name, credit card number, and expiry date. For the
security of consumers' personal information, credit card companies have developed a number of
complementary systems including MasterCard SecureCode and Verified by Visa [8]. These systems
allow users to create a password and use it when they shop online through their credit cards.

2.2. Debit Cards

ATM cards or debit cards use a balance system. This is arguably a savings system. You have to
fill/deposit in first, so that it can be used for cash withdrawals, transfers, payments, top up, etc. If the
balance is empty, small, and insufficient for the transaction, then the card cannot be used. In contrast
to credit cards, payments through debit cards are withdrawn directly from the personal account of the
consumer instead of an intermediary account [9]. This makes it difficult for consumers to handle

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MECNIT 2018 IOP Publishing
IOP Conf. Series: Journal of Physics: Conf. Series 1230 (2019) 012068 doi:10.1088/1742-6596/1230/1/012068

payment disputes as there funds don't have an extra protection in a debit account. For debit payments,
providing the account number is enough without the necessity of producing a physical card or card
number. The use of debit cards is particularly high in most countries with a specific user base
depending on the conditions and regulations attached to the issuance of credit cards. Since there are
lower costs for using debit cards unlike credit cards. This method is suitable for micropayments. In
addition, the overall security of debit card payments is found to be higher than that of credit card
payments with extensive identification requirements demanded by the banks.

2.3. E- Money
The definition of e-money refers to the definition issued by the Bank for International Settlements
(BIS) in one of its publications in October 1996. In this publication e-money is defined as "stored-
value or prepaid products in a record of the funds or value available to a consumer stored electronic
device in the consumer's possession "(stored-value or prepaid product where a certain amount of
money is stored in an electronic media that someone has) [10]. The definition of e-money is more
focused on a type of prepaid card that can be used for various payment purposes (multi purpose) not
on a single prepaid card that can only be used for certain purposes such as telephone cards as
applicable in Indonesia.
E-money which is meant here is also different from other card-based electronic payment instruments
such as credit and debit cards. Credit and debit cards are not "prepaid products" but "access products".
In general, the characteristic differences between "prepaid product" and "access product" are as
follows: [11]
x Prepaid product (e-money)
- The value of money has been recorded in e-money instruments or often referred to as stored
value.
- Funds registered in e-money are fully in the control of consumers
- At the time of the transaction, the transfer of funds in the form of electronic value from e-
money cards owned by consumers to the merchant terminal can be done off-line. In this case,
verification is sufficient at the merchant level (point of sale), without having to be on-line to
the computer issuer.
x Access product (debit card and credit card)
- There is no record of funds on the card instrument
- Funds are fully in the management of the bank, as long as there is no authorization from the
customer to make payments
- At the time of the transaction, the card instrument is used to access on-line to the issuer
computer to obtain authorization to pay for the customer's account, both in the form of a
savings account (debit card) and a loan account (credit card). After authorization by the issuer,
the customer's account will then be debited immediately. Thus, payments using credit and debit
cards require on-line communication to the computer issuer.

Furthermore, some countries today have begun to introduce electronic payment products known as
Electronic Money (e-money) or can be called digital money. The difference between e-money and
electronic payment instruments mentioned earlier is that every payment using e-money does not
always require an authorization process and is not directly related to the customer's account in the
bank. E-money as an electronic payment instrument has the potential to be developed in Indonesia so
that it is expected to encourage the people of Indonesia towards a less cash society. In addition, the use
of e-money will also encourage increased financial inclusion.
The e-money policy that has been carried out in Indonesia is the determination of all toll payments
required to use e-money which has been in effect since 31 October 2017. Telecommunication and
banking companies have also issued e-money services and products. Almost all major banks in
Indonesia currently have e-money services, such as Mandiri e-money, BRI Brizzi, BNI Tapcash, BCA
Flazz, and there are T-cash products from telecommunications companies, Telkomsel [12]. In fact,

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MECNIT 2018 IOP Publishing
IOP Conf. Series: Journal of Physics: Conf. Series 1230 (2019) 012068 doi:10.1088/1742-6596/1230/1/012068

their steps were also followed by startups in the field of financial technology (fintech), which had a
smaller scale, but the movement was very agile like Tokopedia with Tokocash , there is Bukalapak's
and Gopay's Bukadompet owned by Gojek.
Of course this requires the community to get used to using e-money as one of the daily payment
transactions because e-money is one model of a future payment system that has many benefits. The
use of e-money will provide advantages compared to using cash and other non-cash payment
instruments. For example, it is faster and more convenient than using cash, especially small-value
transactions, because the customer does not need to spend the right money or receive change. In
addition to the use of e-money there is no refund error when making a transaction. Another advantage
of e-money is that the time needed to complete a transaction is much shorter than a transaction with a
debit card, credit card or ATM. Because, using e-money does not require on-line authorization,
signature or entering a PIN code. With off-line transactions costs can be reduced.

3. Methods
The data used is secondary data form Bank of Indonesia Report in 2011-2017. This type of paper is
comparative method. Data analysis used is non parametric of Analysis of Variance (ANOVA). This
paper uses comparative method. Data analysis used is non parametric ANOVA (Analysis of
Variance). The data retrieval technique used is study of literature (which is done by reading books),
observation ( which is done by taking secondary data and then analyzing the data), conclusion (which
is taken after the analysis process is carried out ). When viewed from the results, there are significant
differences for each type of payment model. And it is clear that e-money growth is also quite
significant. Even though e-money itself was recently introduced in Indonesia.

4. Results and Discussion

4.1. Result
The Amount of Electronic Money Circulating in Indonesia show in Table 1 as a follows :

Table 1. The Amount of Electronic Money Circulating in Indonesia 2011-2017

Period 2011 2012 2013 2014 2015 2016 2017

Amount
of
INSTR 14.299.726 21.869.946 36.225.373 35.738.233 34.314.795 51.204.580 90.003.848
Sources : Bank Indonesia (2018).

The Amount of Payment Instrument Using a Card show that in Table 2 :

Table 2. The Amount of Payment Instrument Using a Card in Indonesia 2011-2017

Period 2011 2012 2013 2014 2015 2016 2017

Credit
14,785,382 14,817,168 15,091,684 16,043,347 16,863,842 17,406,327 17,244,127
Card
ATM
3,623,992 4,533,187 6,292,164 7,189,917 7,330,388 8,361,351 8,815,007
Card
ATM
Card + 59,761,318 73,219,365 83,170,125 98,638,287 112,948,818 127,786,999 155,663,442
Debet
Sources : Bank Indonesia (2018).

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MECNIT 2018 IOP Publishing
IOP Conf. Series: Journal of Physics: Conf. Series 1230 (2019) 012068 doi:10.1088/1742-6596/1230/1/012068

4.1.1. Kruskal Test – Wallis Test

…………………… (1)

4.1.2. Hypothesis
Ho = The four variables do not different significantly
Hi = The four variables are different significantly

4.1.3. Decison Making

Based on Count Statistic
Based on count statistic < table statistic, Ho is accepted
Based on count statistc > table statistic, Ho is rejected

Based on Probability
If the probability > 0,05 , Ho is accepted
If the probability < 0,05 , Ho is rejected

Table 3. Kruskal-Wallis Test.

Ranksa
Payments N Mean Rank
E Money 7 17.43
Credit Card 7 12.00
The Amount of users ATM Card 7 4.00
ATM Card + Debet 7 24.57
Total 28
Sources : SPSS Result (2018).
Table 4. Test Statistics.
Test Statisticsa,b
Amout Use
Chi-Square 23.432
df 3
Asymp. Sig. .000
a. Kruskal Wallis Test
b. Grouping Variable: Payments
Sources : SPSS Result (2018).

Based on the Table 3 and Table 4 the result show that there are significant differences for each type of
payment model.

4.2. Discussion
E-money is slowly introduced in Indonesia. E-money in Indonesia was introduced in 2007, while in
HongKong was introduced in 1997 and Singapore in 2000. Because of this, e-money is unknown
compared to credit card and ATM/debit card . In fact, e-money is also less well known compared to
other banking products such as mobile banking, SMS banking, phone banking, and internet banking

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MECNIT 2018 IOP Publishing
IOP Conf. Series: Journal of Physics: Conf. Series 1230 (2019) 012068 doi:10.1088/1742-6596/1230/1/012068

[2]. In order to support the success of the National Movement of Non-Cash (GNNT), it is important to
give more intensive socialization about that. One thing to do is to add number of merchants that can
receive e-money. The benefits of using non-cash instruments is very big because this will increase the
efficiency in the transaction as well as ease in daily activities, especially if supported by the security of
transactions and individual data and the number of merchants that accept the use of these cards.

As an electronic payment instrument, the use of e-money in various countries has proven to provide
benefits as an alternative means of non-cash payment, especially for micro and retail transactions.
However, as with other non-cash instruments, e-money also has various risks and potential
implications for monetary policy [13]. so to maintain public trust, e-money development needs to pay
attention to security features to protect the integrity, authenticity and confidentiality of the system
used. Security measures that need to be implemented include prevention, detection and limitation of
losses due to abuse (containtment). In the implementation of e-money there are several institutions that
hold roles such as issuers, operators, clearing and acquirer operators [15]. The existence and role of
each of these institutions is very dependent on the e-money business model developed. In this case the
institution that plays the most important role is the issuer [16]. Therefore, regulation of e-money is one
aspect that needs special attention by the central bank as the payment system authority and monetary
authority. Basiclly, there is nothing difficult to do if we want to learn and become a more advanced
nation. Through collaboration between Bank Indonesia, central and regional governments, payment
system industry players and the entire community, hopefully the non-cash payment system is
increasingly utilized by the community in its economic activities so that we will become more
advanced countries and can always prioritize smarter programs and fun for the people of Indonesia
Bank of Indonesia, as the payment system service authority, will look at several important issues in the
development of e-money. For example, matters of supervision. Bank of Indonesia will certainly pay
attention to e-money issuing institutions, providers of clearing, settlement and risk management. In
addition, related to monetary policy, Bank of Indonesia must examine whether the use of e-money also
has the potential to increase the velocity of money which can complicate the calculation of monetary
aggregate as a target or indicator of monetary policy.
Another important issue of using e-money that is of concern to the central bank is about
seignorage. Seignorage is a profit obtained by the central bank from the difference between the
nominal value of paper money issued and the cost of producing money. If the use of e-money as a
substitute for cash is expanding, it is estimated that it will have an impact on decreasing central bank
revenue from seignorage posts on the central bank's balance sheet. Another issue that is noteworthy is
the security problem and the efficient use of e-money. In essence, Bank of Indonesia will set a rule
that the use of e-money must meet safety and efficiency standards.

5. Conclusion
The result show that there are significant differences for each type of payment model, and the payment
system using e-money is predicted will grow up fo the future. Payment systems using e-money is a
process of modernization of the payment system that is safe, convenient, and easy which has been
developed in several countries in the world.

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