INDONESIA Trends and Developments Contributed by: Maria Sagrado, Frederick Simanjuntak, Stephanie Kandou and Kaila Arinta Nazneen Zulkarnaen, Makarim & Taira S.
peting head-to-head, many players are discovering that partnerships can yield better results, combining the agility and innovation of fintech with the stabil- ity and compliance expertise of established financial institutions. From the banks’ perspective, working with fintech firms allows them to offer cutting-edge products without having to develop every solution in-house. For example, banks can integrate third-party pay- ment gateways, digital wallets, or buy-now-pay-later (BNPL) options into their existing services, giving cus- tomers more flexibility while maintaining oversight of transactions. These collaborations also help banks attract younger, tech-savvy consumers who may have been drawn to purely digital platforms. Fintech companies, on the other hand, benefit from access to the banking sector’s infrastructure and regulatory framework. By partnering with banks, they can gain direct access to clearing and settlement sys- tems, ensure compliance with anti-money laundering (AML) and know-your-customer (KYC) requirements, and tap into the trust that banks have built with their customer base over decades. This can be a significant advantage in a market where regulatory compliance and customer trust are as important as innovation. Some of the most successful examples of collabora- tion in Indonesia have come from co-branded prod- ucts and joint marketing campaigns. A digital wallet provider may launch a special rewards programme in partnership with a bank, or a bank may embed a fin- tech’s lending product into its mobile banking app. In both cases, customers enjoy a richer set of services, while the providers share the benefits of increased transaction volumes and broader market reach. As competition in the payment industry intensifies, such partnerships are likely to become even more impor- tant as a way to differentiate offerings and achieve sustainable growth. Cross-border payment integration One of the most notable developments in Indonesia’s payment landscape is the rapid progress in cross- border payment integration, particularly through the expansion of the QRIS system beyond domestic use. Bank Indonesia has been actively working to link
Indonesia’s payment infrastructure with other coun- tries in the Association of Southeast Asian Nations (ASEAN). Cross-border QR payment linkages have already been established with neighbouring countries such as Malaysia, Thailand, and Singapore, allowing travellers to use their home country’s payment apps abroad with real-time currency conversion. This initia- tive allows Indonesian travellers to make purchases abroad simply by scanning a QR code, with transac- tions settled in each party’s local currency, eliminating the need for manual currency conversion. For the tourism sector, the impact is substantial. Indonesian visitors to popular destinations like Bang- kok or Kuala Lumpur no longer need to carry large amounts of cash or rely solely on international credit cards. Likewise, tourists from those countries visiting Bali or Jakarta can use their home-grown payment apps for a seamless experience. The result is not only greater convenience for travellers but also increased spending at local merchants, particularly SMEs, that were previously unable to accept foreign payments efficiently. Cross-border QRIS is also proving valuable for the migrant worker community. Many Indonesian workers in Malaysia and Singapore send remittances home, and the integration of payment systems is making these transfers faster and cheaper. By removing mul- tiple intermediaries and streamlining currency con- version, cross-border QR payments reduce costs for senders and ensure that more of the transferred amount reaches their families. Strategically, these initiatives support the broader goal of ASEAN financial integration. As more coun- tries join the network, Indonesia’s payment ecosystem will become increasingly interconnected with regional economies, facilitating trade, investment, and tour- ism. For businesses, this represents an opportunity to expand their customer base across borders without the complexities of setting up separate payment chan- nels in each country. The momentum suggests that cross-border digital payments will become a defining feature of Southeast Asia’s financial landscape in the coming years.
224 CHAMBERS.COM
Powered by FlippingBook