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Indonesia Expands QR Payment System to Increase Chinese Spending

FILE - A customer scans a QR code to pay for vegetables at a morning market in Beijing, Aug. 9, 2023. Indonesia will expand QR systems in part to increase tourism from China, where that payment system is common.
FILE - A customer scans a QR code to pay for vegetables at a morning market in Beijing, Aug. 9, 2023. Indonesia will expand QR systems in part to increase tourism from China, where that payment system is common.

Indonesia is expanding its use of a payment system that is popular in China as a way for Chinese tourists to spend easily at even the smallest shops.

The expanded payment system employs QR codes. Although it is primarily aimed at developing regional interconnectivity with other Southeast Asian nations, it plays into Indonesia’s effort to attract Chinese tourists. The central Bank Indonesia is expanding its QR payment system to include Chinese banks as well as banks in Japan and South Korea, two other tourist sources.

QR payments are ubiquitous in China, used to purchase everything from snacks to one-of-a-kind items at luxury boutiques. The pandemic accelerated adoption of contactless payments and made credit cards almost as obsolete as cash by using QR code payments that link directly to a payee’s bank account via mobile phone. The official People’s Daily reported that a 2022 report by the Payment & Clearing Association of China found 95.7% of Chinese mobile phone users pay with QR code scanning.

“We want to increase the number of Chinese tourists coming in,” and increase their length of stays and spending, said Sandiaga Uno, Indonesia’s minister for tourism and creative economy. The ministry held its first “Wonderful Indonesia” promotional event in China in May 2023, the first in three years.

The ministry set a target of attracting up to 1.5 million Chinese tourists in 2024, promoting activities such as chocolate making and elephant bathing, according to Wisnu Sindhutrisno, director of regional tourism marketing from Indonesia's ministry of tourism and creative economy.

Until the pandemic upended travel, Indonesia was becoming an increasingly popular destination for Chinese tourists with 858,000 visiting in 2013 and 2,072,000 Chinese tourists visiting in 2019, according to Statista.

Since the introduction of QR payments to Indonesia in 2019, Indonesians have embraced the nation’s Quick Response Code Indonesian Standard, or QRIS, with usage tripling nearly every year since. In October 2023, Indonesia’s central bank recorded over 43 million QRIS users and more than 29 million merchants registered with QRIS, with most of them small and medium scale enterprises. The central bank also recorded more than 1.6 billion transactions with a value of $16 billion, an increase of 186%.

A memorandum of understanding (MOU) signed on November 14, 2022, in Bali, Indonesia, on the sidelines of the G20 Leaders’ Summit, focused on unifying QR code payment systems among the banking systems of Singapore, Indonesia, Thailand, Malaysia and the Philippines. Although each country has its own national QR system, linking allows users to do a QR scan to make payments directly from their home bank to a seller of goods or services in another country, usually at better conversion rates than those set by credit cards.

As the MOU was signed, Indonesian President Joko Widodo said in a video statement that he expected the cross-border payment initiative to extend to the global level. The governor of Bank Indonesia, Perry Warjiyo, said that the MOU would make payments throughout the region “very fast and easy.” He described the system as a first step into a global digital world.

Vietnam signed the MOU in August 2023. Bank Indonesia Deputy Governor Filianingsih Hendarta said Indonesia signed an MOU with the Central Bank of the United Arab Emirates for QRIS in December 2023. And Japan’s Ministry of Economy, Trade, and Industry announced last week that Japan and the Association of Southeast Asian Nations plan to unify QR payment systems.

The flip side to the expanded QR payment system means Indonesian tourists will be able to shop using rupiah in participating countries. Some 221,600 Indonesians visited China in 2023.

Cindy Tan is a freelance tour leader in Jakarta who has been leading trips to China for Indonesians for seven years. She believes the expanded QR payment system will streamline payments for her clients as they travel in China. She envisions paying in China using the QRIS system rather than dealing with many options, including Alipay, one of China’s QR payment systems.

“In China, I usually pay using cash because sometimes it’s easier,” she said, adding that outside big cities, it can be difficult to pay using Visa and Mastercard because “normally they won’t accept international credit cards.”