QRIS expands to Malaysia in push for cross-border payments

The QRIS expansion allows users from either country to use the QR code standard for payments in either country, thereby doing away with the need to exchange money or carry a credit card.

Deni Ghifari

Deni Ghifari

The Jakarta Post

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A small coffee business displays its goods and the QRIS payment code at an MSME event in Bangli, Bali, in August 2020.

May 9, 2023

JAKARTA – Indonesians can now use the popular Quick Response Indonesia Standard (QRIS) to make payments in Malaysia as the two countries take a major step forward in integrating digital transaction systems.

The project, which also involves a Malaysian payment system made available in Indonesia, was launched on Monday after months of testing.

Attending the launch ceremony, held as part of the annual Digital Economy and Finance Festival Indonesia (FEKDI) in Jakarta, Bank Indonesia (BI) Governor Perry Warjiyo and Coordinating Economic Minister Airlangga Hartarto kicked off the commercial operation of QRIS Indonesia-Malaysia on Monday.

“I hope the cross-border QRIS [payments] and the Credit Card Indonesia (KKI) [initiative] can push transactions by micro, small and medium enterprises [MSMEs], be they through domestic spending or expanding access to international markets,” said President Joko “Jokowi” Widodo, who attended the event virtually.

The President also used the opportunity to advocate for a wide adoption of the KKI credit cards, which were launched on the same day and are aimed at use by government officials to improve traceability and provide greater accountability in state spending.

ASEAN member states have been pushing for wider use of local currencies in transactions and trade among countries in the region with the aim of reducing their reliance on United States dollars, which they will achieve through cooperation in cross-border payments and local currency settlements (LCS).

The QRIS expansion allows users from either country to use the QR code standard managed by BI for payments in either country, thereby doing away with the need to exchange money or carry a credit card.

The Malaysian counterpart involved in this payment system integration is called DuitNow, which is a money-transfer service provided by Kuala Lumpur-based PayNet. The integration means the same merchants in both countries will accept payments through either of the two systems.

The payment system integration is significant given the high number of visits between the neighboring countries, with Malaysia featuring among the top-two countries of origin for travelers to Indonesia in the past two years.

In 2022, Malaysia accounted for 19 percent of incoming foreign travelers with some 1.03 million visits, while the previous year it sat in second place behind Timor-Leste, with around 480,700 visits.

Meanwhile, Malaysia is ranked among the top medical tourism destinations in the region, alongside Singapore and India.

In 2019 more than 1.2 million medical tourists visited the country with Indonesia among the top-five origin countries, according to the Malaysian government.

“[God willing], the number of QRIS users this year will reach 45 million,” Perry said on Monday, as he revealed that 89 percent of merchant users were MSMEs.

From the Indonesian side, the arrangement involves more than 20 financial institutions, including Bank Sinarmas, Bank Permata, Bank Central Asia and several digital payment providers, such as DANA, Gopay and OVO.

Read also: Majority of Indonesians ready to go cashless: Survey

On the Malaysian side, several big lenders are involved, including CIMB Bank, Hong Leong Bank, Maybank and United Overseas Bank Malaysia, have assumed the responsibility of ensuring smooth connectivity.

Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said on Monday the cooperation would enable “fast, secure and cost-efficient payments”.

“We have also begun discussions with BI to expand this linkage to support instant fund transfers,” said the central bank chief.

“This will benefit Malaysians and Indonesians who live, study or work in the other country to send money back home more easily and cheaply,” she added.

Indonesia has concluded the same arrangement already in place with Thailand, and the government is looking to similar deals with Singapore and the Philippines.

In March, BI opened the possibility of further expanding the cooperation to Vietnam, Cambodia, Brunei and Laos.

Read also: Jokowi wants local governments to ditch Visa, Mastercard

Meanwhile on the KKI, Perry said the technical guidance regarding the use of the KKI for central and regional government bodies had been arranged by the Office of Coordinating Maritime and Investment Affairs Minister, Finance Ministry and Home Ministry.

In March, BI also revealed that it was preparing to introduce a domestic credit card, similar to the KKI, but for consumer use. It aims to ensure all transactions are settled within the country instead of needing to go through foreign payment networks, as is the practice with Visa and Mastercard.

The domestic credit card is also expected to mitigate the risk of economic disruption caused by international policy under the influence of geopolitics as experienced by Russia, which was financially sanctioned by the US after the Ukraine invasion.

BI official Dicky Kartikoyono told reporters on Monday that the implementation of QRIS Indonesia-Singapore would go live in the fourth quarter of the year, if everything goes according to plan. The Philippines, on the other hand, was not yet ready, he said.

“It takes two to tango,” Dicky said about the arrangement with the Philippines.

Furthermore, he revealed that talks about making the same arrangement with Japan, India and South Korea were already on the way.

As of March, the total value of QRIS transactions amounted to Rp 15.35 trillion (US$1.04 million) in almost 135 million transactions. The government is looking to reach 45 million QRIS users and 1 billion transactions this year.

Dicky said Indonesia was expecting the payment deal with Malaysia to lead to a large volume of transactions given the high mobility between the two countries.

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