Traveling to other ASEAN countries is now easier than ever. Not only due to the visa-free policy, but additionally due to the convenience 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 could lead to more stable countries’ currency exchange rates and fewer dependence on the US dollar. It also encourages using local currencies, supporting the event of cross-border trade and investment within the ASEAN region. This will increase integration and cooperation between the countries of the region, strengthening the regional economy on a world scale.
The existence of technology has made it easier for people to make payments anywhere. Physical wallets are actually less needed as debit and bank cards have develop into common alternatives. In fact, smartphones also play a giant role. With the numerous increase in smartphone use, QR code payments have gotten an increasing number of popular. Various payment transactions will be accomplished with one tap by simply scanning the QR code together with your smartphone, eliminating the necessity for a physical wallet.
This convenience can also be inextricably linked to the consequences of globalization, where the borders between countries are increasingly disappearing. Economic integration resulting from globalization makes the immediate execution of cross-border payments urgent. This system allows for simpler and economical payments between countries.
However, its implementation poses quite a few challenges, including national governance, infrastructure disparities between countries and high costs. Unfortunately, these high costs have a major impact on some groups. In his article, Fabio Panetta, an economist on the European Central Bank, notes that prime costs make it difficult for a lot of small and medium-sized enterprises to expand their business across borders as a consequence of operational costs. In addition, high fees place a disproportionate cost burden on the world’s most vulnerable populations, similar to migrant staff, who may pay much 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 Indonesian Quick Response Code Standard (QRIS) as a payment system innovation that is an element of the Indonesia Payment System Blueprint 2025 plan. QRIS goals to supply users convenience of payments via one QR code for all payment applications on mobile devices.
The aim is to extend transaction efficiency, speed up financial inclusion, support small and medium-sized enterprises and stimulate economic growth. This move is an element of Bank Indonesia’s transformation to support the rapid development of the digital economy.
When Indonesia held the G20 presidency in 2022, it took the chance to launch a cross-border QR initiative focused on strengthening financial integration amongst countries, particularly within the ASEAN region, through connected regional payments. Bank Indonesia has successfully partnered with central banks from ASEAN countries similar to 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 most recently Singapore. Meanwhile, there are rumors that the Philippines and Brunei Darussalam will probably be the subsequent expansion targets for QRIS.
Indonesia also plans to encourage other Southeast Asian countries, Myanmar, Cambodia and Laos, to affix the payment system. This cooperation is predicted to not only speed up financial integration in ASEAN, but additionally move the region closer to a unified digital payments ecosystem that may boost trade, tourism and economic growth in the long term. It is predicted that over time, the implementation and expansion of the cross-border QRIS system will even be applicable to non-ASEAN regions.
