QRIS transforms digital payments in Indonesia, challenging Western financial dominance

JAKARTA: The international financial system has long been dominated by Western institutions, but in Indonesia, the central bank’s Quick Response Code Indonesian Standard (QRIS) is offering a credible alternative.

From street vendors to upscale shopping malls, businesses across the country are increasingly embracing the QR code payment system for digital transactions.

QRIS, implemented nationwide in 2020, was designed to streamline payment processes – digitising cash payments, integrating non-cash methods into a single standard and transforming the local financial landscape.

CHALLENGING WESTERN DOMINANCE

Jakarta residents told CNA that QRIS has made payments more convenient for anyone with a bank account.

A consumer can scan a merchant's QR code using their mobile banking or e-wallet application to complete a transaction.

The funds are then securely transferred from the consumer’s linked account to the merchant’s account.

“It definitely makes transactions easier, as you don't need to have cash on hand, and there's usually no minimum payment,” said one resident.

Another said: “It's actually easier for us as buyers. For sellers, it's also more effective to check whether we've paid or not.”

In a global economic environment where payment systems have emerged as a crucial battleground for financial and geopolitical influence, Indonesia’s QRIS offers a localised counter-narrative that challenges the dominance of Western platforms, said observers.

The impact has been significant enough that the United States, in its latest National Trade Estimate Report on Foreign Trade Barriers, singled out QRIS, criticising the system as being unfair to foreign providers.

Analysts told CNA that this marks a new era for Indonesia, opening the door to partnerships with a wider range of players.

“I think it’s good for Indonesia’s balance of payments,” said Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies, a Jakarta-based economic think tank.

“It’s also bringing more inflow of money, and for businesses themselves – whether small enterprises or big corporations – can enjoy because they’re offering, for instance, less currency risks,” he added.

“Rather than converting to US dollars, we can convert directly to any local currency as our counterpart.”

EXPANSION PLANS

According to the Indonesian Payment System Association, Visa and Mastercard credit card networks remain the preferred choices for cross-border transactions.

The number of credit card transactions in the country grew by 21 per cent last year.

QRIS transactions, meanwhile, surpassed 6 billion, as consumers increasingly embraced the system for its efficiency.

There are approximately 57 million QRIS users.

Building on its success at home, Indonesia has expanded QRIS overseas, with Indonesians now able to use it in Malaysia, Thailand and Singapore.

Plans are also underway to extend the service to China, India, Japan, Saudi Arabia and South Korea.

As Indonesia expands QRIS into more markets, analysts said that reducing reliance on Western networks and building a more independent financial ecosystem in Southeast Asia could open new opportunities for regional and global trade.

Amid criticism from the US, Bank Indonesia Governor Perry Warjiyo said QRIS was built on international frameworks but tailored to Indonesia’s needs.

“It was developed together with the industry,” he noted, adding that it plays an important role in driving digitalisation, boosting economic inclusion, and enhancing efficiency to support people’s welfare.

“It is (also) integrated and has been integrated globally.”