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ASEAN's path to modernization: Here's the evolution of QRIS payment systems in ASEAN!

ASEAN's path to modernization: Here's the evolution of QRIS payment systems in ASEAN!

Traveling to other ASEAN countries is now easier than ever. Not only because of the visa-free policy but also because of the ease of payment systems. Several ASEAN countries have introduced cross-border payments, making it easier for travelers to make purchases.

In the long run, cooperation on cross-border payments in ASEAN can lead to more stable exchange rates of countries' currencies and less dependence on the US dollar. It also encourages the use of local currencies, supporting the growth of cross-border trade and investment in the ASEAN region. As such, integration and cooperation among countries in the region will increase, strengthening the regional economy on a global scale.

The existence of technology has made it easier for people to make payments anywhere. Physical wallets are now less necessary as debit and credit cards have become common alternatives. In fact, smartphones are also playing a big role. With the significant growth in smartphone usage, QR code payments are becoming increasingly popular. With a single touch, various payment transactions can be completed by simply scanning the QR code with a smartphone, eliminating the need for a physical wallet.

This convenience is also inextricably linked to the impact of globalization, where borders between countries are increasingly disappearing. The economic integration resulting from globalization makes the immediate implementation of cross-border payments urgent. This system allows the implementation of payments between countries to be more efficient and economical. 

However, its implementation faces a number of challenges, including domestic governance, infrastructure disparities between countries, and high costs. Unfortunately, these high costs have a significant impact on certain groups. In his article, Fabio Panetta, an economist at the European Central Bank, notes that high costs make it difficult for many MSMEs to develop cross-border businesses due to operating costs. In addition, high fees place a disproportionate cost burden on the world's most vulnerable populations, such as migrant workers, who may pay significantly higher fees to send money to their home countries.

This payment system innovation was first introduced by Bank Indonesia in August 2019. Bank Indonesia introduced the Quick Response Code Indonesian Standard (QRIS) as a payment system innovation, which is part of the Indonesian Payment System Blueprint 2025 plan. QRIS is designed to provide users with payment convenience by using a single QR code for all payment applications on mobile devices.

The goal is to increase transaction efficiency, accelerate financial inclusion, support MSMEs, and drive economic growth. This move is part of Bank Indonesia's transformation to support the rapid development of the digital economy.

When Indonesia held the G20 presidency in 2022, it seized the opportunity to launch a cross-border QR initiative with a focus on enhancing financial integration among countries, particularly in the ASEAN region, through connected regional payments. Bank Indonesia successfully partnered with central banks from ASEAN countries such as Thailand, Singapore, Malaysia, and the Philippines by signing a Memorandum of Understanding (MoU) on cross-border payments.

As of November 2023, several ASEAN member countries have officially adopted the QRIS payment system, including Thailand, Malaysia, Vietnam, and recently Singapore. Meanwhile, the Philippines and Brunei Darussalam are rumored to be the next targets for QRIS expansion.

Indonesia also plans to encourage other Southeast Asian countries, Myanmar, Cambodia and Laos, to join the payment system. This collaboration is expected to not only accelerate financial integration in ASEAN, but also bring the region closer to a unified digital payment ecosystem that can boost trade, tourism, and economic growth in the long run. Over time, it is expected that the implementation and expansion of the cross-border QRIS system can also be applied to regions outside of ASEAN.

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