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With electronic money transactions expected to become more popular, banks and telecom firms need to improve their risk management systems to avoid fraud, executives and industry analysts warned on Thursday.

Sigit Pramono, chairman of the Indonesian Banking Association (Perbanas), said e-Money would become “inevitable” in increasingly “cashless” societies.

But Sigit, also a former president director of Bank Negara Indonesia, said such systems were vulnerable to scams.

This fact has not escaped the central bank’s attention: Bank Indonesia has put a Rp 5 million ($580) cap on each e-Money transaction to prevent fraud, said Ronald Waas, BI’s director of accounting and payments.

“Looking at the huge potential of the business, banks and mobile phone operators should beef up efforts to improve it,” he said during a seminar hosted by Investor Daily on Thursday.

“E-Money should be treated the same as paper money in the future,’’ Ronald added. “Every player must follow BI rules.”

Peter F. Gontha, a former banker and now a publisher for Berita Satu Media Holdings, said e-Money was convenient because it was fast and offered a relatively safer cash transactions than ATMs. But he said the system could be prone to hacking and “other crimes.”

Investor Daily and the Jakarta Globe are part of Berita Satu.

E-Money was introduced in the country in 2006 and has grown since. The number of users of the service rose from 400,000 in 2007 to around 3 million in 2009.

BI data showed that there were 10 million e-Money users as of April this year. That period saw 95,000 transactions worth Rp 1.9 billion. Ronald said the figure was likely to increase before the year-end.

At least four telecom firms and six banks, including Bank Mandiri and BNI, currently offer e-Money services.

While banks have e-Money cards, operators like Telkomsel introduced electronic savings systems that allowed customers to transfer money and pay bills using their cellphones.

BNI president director Gatot M. Suwondo said lenders and mobile phone operators should team up to improve the service and protect clients from money laundering, fraud and larceny. “Banks used to look at telecom operators as competitors, but they finally realized that it would be better to become partners,’’ Gatot said.