Indonesia Digital Payment

Indonesia, one of the largest and fastest-growing economies in ASEAN, is experiencing a significant surge in the adoption of digital payments. The country’s population of over 270 million, combined with widespread use of smartphones and government efforts to increase financial inclusion, have created a favorable environment for the growth of new and innovative payment systems.

Since January 2020, Bank Indonesia has required digital payment services to use standardized QR codes to ensure all banks and electronic wallets are interoperable. Customers can make payments by simply scanning a merchant’s QR code with their smartphones. Indonesia already had fast growing e-commerce and social commerce markets where digital payments are usual. The number of users and transaction value of one of Bank Indonesia or BI’s non-cash payment systems, the Quick Response Indonesian Standard (QRIS) continues to increase.

QR payments have more than tripled in each year since standardization; and in 2022 it reached 98.5 trillion rupiah. Indonesia has 22.4 million registered merchants, far ahead of the rest of ASEAN countries and that number is set to double to 45 million in 2023. Currently Bank of Indonesia is testing facial recognition technology to enable payment in places like schools, where not every school allows students to bring phones.

The ASEAN Business Advisory Council (ASEAN BAC) is planning to work on integrating its respective countries’ QR code payment systems which is called “the regional QR Code payment linkage (ASEAN QR Code).” Each member states in ASEAN will share QR code system with one another and they are working with the central banks of all member countries, as Indonesia will be with Bank Indonesia.

In October 2022, Indonesia’s central bank governor said the cross-border payment program between five ASEAN countries, namely Thailand, Singapore, Malaysia, Philippines, and Indonesia will be fully connected in 2023. Linking QR codes would also mean bypassing the need for US dollars as an intermediary. Indonesia and Thailand in 2021 had already launched a pilot for cross-border payment linkage. Users from Thailand can scan Indonesia’s QR code, also known as QRIS, to make payments to merchants across the archipelago and vice versa and it is also available to pay for cross-border e-commerce transactions.

Up to early May 2023, six Thai banks have connected to Indonesia’s QR-code facilitated payments or the QRIS, namely Bangkok Bank, Bank of Ayudhya (Krungsri), CIMB Thai, Kasikornbank, Krungthai Bank, and Siam Commercial Bank. The ASEAN-5 already have their respective instant payment systems: for instance, Indonesia with the QRIS and the Bank Indonesia Fast Payment. Vietnam is likely to be the next to join the connectivity while Brunei Darussalam, Laos, and Cambodia would follow later.

The regional payment linkage is expected to benefit micro-small, and medium enterprises (MSMEs). Aside from the QR code integration, Indonesia plans to make an ASEAN peer-to-peer (P2P) lending platform and an “Entrepreneurship Wiki” as past of its chairmanship legacies. The platform would serve as an online platform that could support the interconnectivity of MSMEs in ASEAN. 

For more information, please kindly contact: Commercial Specialist Ms. Yulie Tanuwidjaja.