Bank Indonesia And Central Bank Singapore Agree To Establish Inter-National QR Payment Cooperation

JAKARTA - Bank Indonesia (BI) and the Monetary Authority of Singapore (MAS) signed a Letter of Intent (LOI) regarding the framework for settlement of transactions in local currency (local currency settlement) and inaugurated the implementation of interconnection in payments for QR between countries between Indonesia and Singapore.

Bank Indonesia Governor Perry Warjiyo conveyed that this implementation allows users to make retail payments between countries by scanning the Quick Response Code Indonesian Standard (QRIS) or QR Network for Electronic Transfers Singapore (NETS).

"This inter-state QR payment interconnection is an important achievement of BI and MAS efforts in encouraging the integration of the digital economic and financial ecosystem, as well as improving economic relations between Indonesia and Singapore," Perry said in a written statement, Saturday, November 18.

Perry conveyed that with increasing payment convenience, this interconnection will be able to expand market access for business actors of the two countries, especially micro and small businesses, through the increasing number of new consumers.

This initiative will also benefit tourists from the two countries as post-pandemic tourism returns in the first half of 2023, there will be 600,000 arrivals from Singapore to Indonesia, and 1.1 million tourists from Indonesia to Singapore.

Later, after being implemented in 2024, this framework will facilitate the completion of cross-border payment transactions, including payments with QR, trade and investment between Indonesia and Singapore by using the local currency of each country.

According to Perry, this will support business actors and other users to minimize exposure to the risk of exchange rates and increase efficiency.

The LOI is a follow-up to the signing of a Memorandum of Understanding signed by the two central banks regarding cooperation to encourage bilateral transactions in local currencies (LCT framework) in August 2024.

This is in line with efforts to strengthen ASEAN's financial integration to facilitate the use of local currencies in ASEAN transactions between countries.

Perry said interconnection of cross-border QR payments between Indonesia and Singapore would encourage faster, cheaper, transparent, and inclusive payments between countries, especially for MSMEs.

According to Perry, this initiative is a follow-up to the commitment of ASEAN member countries to the Regional Payment Regional Payment Connectivity (RPC) and the implementation of the 2025 Indonesian Payment System Blueprint, in realizing a more convenient and efficient payment method for the community.

"We also announced other strategic initiatives to encourage the wider use of local currencies in bilateral transactions through the framework of Local Currency Transaction (LCT), which is expected to be implemented in 2024," he said.

Through the implementation of the LCT framework, the interconnection initiative for QR payments between countries will later use a direct quota of local currency exchange rates provided by the Appointed Cross Currency Dealer (ACCD) bank.

MAS Managing Director Ravi Menon said the QRIS-QR NETS payment interconnect would encourage e-commerce between countries and tourist spending between Singapore and Indonesia by individuals and small business actors.

In the future, the cooperation framework for the completion of local currencies by BI and MAS will complement QR payment interconnections through facilitation of the use of Indonesian Rupiah and Singapore Dollars for the completion of inter-state payment transactions.

"This initiative marks Singapore's achievements in strengthening cross-border payment interconnections that continue to develop with major partner countries in the region." he said.