As per the information detailed in the announcement, the system aims to provide increased independence together with decreased fees, enabled through transactions settled locally rather than by foreign providers.
BI’s spokesperson Erwin Haryono advised that, as quoted by Asia News Network, the central bank has been in talks with local industries regarding the system and progress stands at 90%, however, no information was provided on when the credit card is set to be launched or what it would be called.
As per their statement, a domestic credit card is believed to bring forth several benefits, particularly decreased fees, as offshore settlement and reliance on foreign payment networks of the likes of the US-based Visa and Mastercard would no longer be required. The official exemplified the situation of purchasing an item in Yogyakarta with a credit card, stating that although usually the settlement would be done overseas, the domestic credit card would enable it to be done in Indonesia.
Based on the information detailed in the announcement, the news follows President Joko “Jokowi” Widodo’s call for the usage of homegrown credit cards to have the country’s independence in the financial transactions field increased, as their belief is that such independence is ‘essential’ in protecting transactions from geopolitical fallout.
Providing context on the domestic credit card system plans, the announcement further exemplifies the US as having leveraged economic tools such as disconnection from Western payments systems to put pressure on regions thought to be acting against its national interests. Russia has been on the receiving end of such measures following its invasion of Ukraine, and there have also been warnings of secondary sanctions against countries conducting trade with Russia. The US sanctions that prompted Mastercard and Visa to render their services inoperable for Russia-issued cards resulted in citizens being unable to use their credit cards, be that at home or abroad.
Having this knowledge as their basis, company representatives believe increased reliance on foreign providers to be ‘quite terrifying’, as quoted by Asia News Network. BI is planning to make the issuance of domestic credit cards for local banks optional, as opposed to mandatory, however, the bank is set to ensure that the scheme is competitive. The central bank has also confirmed that the domestic network is set to include sophisticated features of the likes of fraud detection, which are included within the offering of existing players like Visa and Mastercard.
The announcement also details that BI has been looking to better payment systems within the region, having introduced its proprietary domestic interbank system entitled GPN, which services as the network for domestic debit cards. Furthermore, the company launched BI-fast, a retail payment infrastructure that can be accessed via smartphone apps to facilitate inter-bank transfers in a cheap and fast manner.
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