Indonesia, Malaysia Establish QR Linkage for Cross-Border Payment

TheIndonesia.id - Indonesia and Malaysia's central banks have launched a cross-border payment linkage through QR code, to enable seamless transaction for users in both countries.

On Thursday, January 27, a pilot phase was launched for the innovation, and the two institutions targets a full commercial launch in the third quarter of 2022.

Deputy governor of Bank Indonesia Doni Primanto Joewono said Indonesia understands the importance and urgency of creating a cross-border payment system linkage, and the initiative with Bank Negara Malaysia (BNM) is an effort to accelerate the advancement.

“This will give more options for users in the cross-border payment space and serve as a key to improve transaction efficiency, support the digitalization of trade and investment, and maintain macroeconomic stability by promoting a more extensive use of local currency settlement (LCS) framework,” Joewono said in statement on Thursday.

“Through the use of direct quotation of local currency exchange rates provided by Appointed Cross Currency Dealer (ACCD) banks under the LCS framework, it will improve the efficiency of transactions, thus lowering the transaction cost."

Deputy governor of BNM Jessica Chew Cheng Lian added that the initiative will be the first among future steps to realize the vision of an ASEAN network of efficient retail payment systems.

“This in turn will further accelerate our digital transformation and financial integration, for the benefit of individuals and businesses,” Chew Cheng Lian said.

Through this linkage, consumers in both countries will be able to make retail payments by scanning the QRIS (Quick Response Code Indonesian Standard) or DuitNow QR codes provided by offline and online merchants. And in the future, the linkage will be expanded to also support cross-border remittance where users in both countries can make real-time fund transfers with convenience.

Tourism sector is expected to enjoy the most benefits from the collaboration. According to Bank Indonesia, the sizeable traveler flows between the two countries recorded an average of 5.6 million arrivals yearly before the pandemic.

Both countries are also key remittance corridors for their nationals working abroad who will benefit from faster, cheaper, and more transparent cross-border remittances.

Lastly, this initiative is also aligned with the cross-border payments roadmap, which is one of the priorities in Indonesia’s G20 presidency, in an effort to maintain the momentum initiated by the past two G20 presidencies to resolve the challenges in cross-border payments.

Besides the two central banks, the project also involved the Indonesian Payment System Association (ASPI), RAJA (Rintis, Artajasa, Jalin, and Alto), and Payments Network Malaysia Sdn Bhd (PayNet) as payment system operators; Bank Mandiri, Bank Negara Indonesia (BNI), and CIMB Bank Berhad as settlement banks; and other participants, including various banks and non-bank payment service providers from both countries.