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Central Banks of Indonesia and Singapore begin trial on cross-border payments

Friday 18 August 2023 10:17 CET | News

Indonesia’s central bank has announced the start of a trial of cross-border QR code payments with Singapore.

According to an earlier statement from Singapore’s central bank, both parties have set an objective of integrating the system in the second half of 2023. The commencement of work was first announced in August 2022, their goal being to allow users to make instant, secure payments by scanning the Quick Response Code Indonesian Standard (QRIS) or NETS QR codes displayed by merchants.

Indonesia’s central bank has announced the start of a trial of cross-border QR code payments with Singapore.

This payment connectivity is intended to enable individuals and businesses, particularly SMEs, to conduct cross-border trade, ecommerce, and financial activities more competently. Moreover, it will support tourism growth as international travel has resumed after the COVID-19 pandemic, the traveller flows between the two countries reaching 1.9 million arrivals in Indonesia from Singapore and 3.1 million arrivals in Singapore from Indonesia.

The collaboration of industry representatives from both countries, together with the joint stewardship of BI and MAS, including the Indonesian Payment System Association (ASPI), RAJA (Rintis, Artajasa, Jalin, and Alto), and NETS, has enabled the QR code linkage. As per the Central Banks of Indonesia’s officials, during Indonesia’s Presidency in 2022 and ASEAN Central Bank Governors’ Meeting in April 2022, payment digitalisation and cross-border payments have become a priority, the initiative representing a milestone of the Indonesian Payment System Blueprint 2025. Moreover, the project promotes the use of local currencies, while providing more options for users in cross-border payment transactions, and serves a role in improving transaction efficiency, digital economic and financial inclusion, and macroeconomic stability.

QR code use in payments

Combining multiple payment QR codes into a single label, Singapore launched Singapore Quick Response Code (SGQR) in 2018, to simplify QR payments. Consumers could pick their preferred QR payment option from a merchant’s label, scan the code, and finish the payment. Indonesia launched the QRIS in 2019, due to the rising amount of QR payment options in the region. 

The COVID-19 pandemic influenced the way individuals made payments, with contactless payments becoming the norm, encouraging merchants to make strategic pivots and provide alternative solutions, including QR codes. Cross-border payments can also benefit from the use of QR codes, as they provide a secure and cost-efficient solution.

According to ASEAN’s report, several ASEAN Member States (AMS) are interested in the development of interoperable QR codes for payments, as they enable businesses to accept electronic payments directly into their bank or electronic money accounts, while avoiding the costs associated with handling cash or using electronic data capture equipment, including POS terminals. Considering that both banks and non-bank e-money issuers can become interoperable with the use of QR codes, the integration for cross-border payments in the currencies of the users is likely to increase e-payment acceptance for large merchants, as well as small ones, including retailers, vendors, and taxi drivers. The technology could benefit in advancing the inclusion of the underserved population in the financial system, while also facilitating cross-border trades, inter-AMS remittances, and other financial transactions in the region.

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Keywords: cross-border payments, QR code, QR payments, contactless payments, COVID-19
Categories: Payments & Commerce
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Countries: Asia
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