QRIS Cross-Border as a Bridge for Digitalization of the ASEAN Payment System

By using QRIS for cross-border payments within ASEAN, countries are no longer dependent on the value of the US dollar.

By using QRIS for cross-border payments within ASEAN, countries are no longer dependent on the value of the US dollar. Moreover, cooperation among ASEAN countries is increasingly integrated and sustainable. Thus, it can strengthen the ASEAN region’s economy at the global level.

The payment system is always changing. Advances in technology have made it easier for people to make payment transactions wherever they are. People no longer need to carry a lot of money in their wallets, they just need to use debit or credit cards. But again, technology continues to develop. The massive development of smartphones in society has had an influence on the payment system. Nowadays, people don’t even need to carry their wallets anymore, because smartphones can be used for payment transactions. Just by scanning a QR, we can complete various payment transactions in one touch.

The ease of the current payment system is in line with the globalization era which makes the world seem borderless. The economic integration that occurs as a result of globalization makes it important to implement cross-border payments immediately. Cross-border payments allow for faster and cheaper payments to be made between countries. However, its implementation faces various challenges such as domestic governance, infrastructure gaps in different countries, and the high costs. These high costs have two negative effects, as stated in the writing of European Central Bank economist, Fabio Panetta, on October 31, 2023. First, many small and medium businesses find it difficult to expand their business across borders because of operational costs. Second, the world’s most vulnerable populations pay disproportionately more than others, for example migrant workers can face exorbitant costs when sending money home.

The development of cross-border payments is also a priority for some world economic organizations. In January 2023, the Committee on Payments and Market Infrastructures in collaboration with the World Bank and the International Monetary Fund issued a joint report entitled “Exploring Multilateral Platforms for Cross-border Payments”. The report shows that there are several barriers that could limit multilateral platforms to enhance cross-border payments, such as business model considerations, lack of demand for services, and weak public sector support for building platforms. The report also provides two possible approaches to increasing the role of multilateral platforms: by extending the reach and enhancing the functionality of existing regional platforms, and developing new platforms with extended reach from the outset, leveraging the latest technology and common standards.

The innovation of payment system via QR code was initiated by Bank Indonesia in August 2019, as an embodiment of the Indonesian Payment System Blueprint for 2025. The QR code standard for this payment is called the Quick Response Code Indonesian Standard (QRIS). This system will make payments easier for users because all transactions can be done with just one QR code for all payment applications on mobile phones. QRIS aims to encourage transaction efficiency, accelerate financial inclusion, advance MSMEs, and encourage economic growth. This payment system is Bank Indonesia’s initiation in carrying out transformation to support the acceleration of digital economic development.

The G20 Presidency in 2022 has provided an opportunity for Indonesia to initiate cross-border QR increasing financial integration between countries, especially in the ASEAN region through regional payment interconnectivity. At this forum, Bank Indonesia succeeded in collaborating with the central banks of ASEAN countries such as Thailand, Singapore, Malaysia, and the Philippines to sign a Memorandum of Understanding (MoU) for cross-border payments which shows collective steps towards fast payments. This innovation aims to expand the use of local currency in international transactions, so that payments become more efficient and reduce dependence on the US dollar. In the following year, Indonesia also has a great chance to accelerate the implementation of cross-border QR through Indonesia’s Chairmanship of ASEAN 2023.

As of November 2023, three ASEAN countries have officially used QRIS as a payment system. Starting with Thailand which officially uses QRIS as of August 2022, followed by Malaysia starting May 2023, and recently Singapore in November 2023. The Philippines which has signed the MoU for cross-border payments will be the target for expanding the use of QRIS afterwards. Indonesia will also encourage five other Asian countries, including Myanmar, Vietnam, Brunei Darussalam, Cambodia, and Laos, to collaborate on this payment system. Through this collaboration, ASEAN countries will not only encourage financial integration, but also push the region closer to a unified digital payments ecosystem, which can further increase trade, tourism, and economic growth in the long term. In the future, QRIS cross-border system is expected to be implemented and expanded beyond ASEAN.

The massive implementation of cross-border QR in many countries will face several challenges that have the potential to become obstacles. First, the gap in digital development between countries will raise concerns regarding data privacy and cyber security. Second, the low level of financial inclusion and financial literacy in several countries will disrupt the adoption process of this digital payment system. Even though this cross-border QR policy is considered to have great potential, its implementation must be carried out carefully because it involves cross-border data exchange.

Nurul Ardhaninggar
Nurul Ardhaninggar
Digital manager of government investment at the Ministry of Finance of the Republic of Indonesia and currently a master's student in digital transformation and competitiveness.