Navigating the Complexities of Indonesian Payment Infrastructure

Trade discussions between Indonesia and the United States have taken an interesting turn,with Indonesia’s payment systems,including the Quick Response Indonesian Standard (QRIS) and the national payment gateway,emerging as key points of negotiation. This progress highlights the growing importance of digital financial infrastructure in international trade relations.

Government Response and Coordination

Coordinating Minister for the Economy, Airlangga Hartarto, has indicated that the Indonesian government is actively engaging with Bank Indonesia (BI) and the Financial Services Authority (OJK) to address concerns raised by the US. We have coordinated with OJK and BI, especially related to the payment requested by the American, Hartarto stated during a recent online press conference.

While the specifics of these “requests” remain undisclosed, the involvement of key regulatory bodies suggests a complete review of indonesia’s payment policies is underway.

Historical Context: The GPN and US Card Providers

This isn’t the first time US payment companies have sought influence over indonesia’s payment landscape. Back in 2019, major US card providers lobbied the government and Bank Indonesia concerning the implementation of the National Payment Gateway (GPN).The GPN mandates that domestic transactions be processed through switching companies with majority domestic ownership.

According to a Reuters report from October 10, 2019, after GPN’s launch, Indonesia was reportedly considering removing the requirement for US companies like Mastercard and Visa to partner with local switching companies for domestic payment processing. This change will allow the US-origin company to process credit card transactions without local partners, the report stated, highlighting the potential impact on the competitive landscape.

This is the victory of the US government’s lobby in the midst of the pressure of a number of Asian countries that issued special rules to boost local payment tools.

Reuters, October 10, 2019

The Stakes: GSP and Market Access

The US request regarding GPN is reportedly linked to indonesia’s desire to regain access to the Generalized System of Preferences (GSP) facility. This facility, which provides reduced import duties for Indonesian exports to the US, has been suspended since 2022. The US is leveraging trade negotiations to ensure fair market access for its companies, especially in the lucrative payment processing sector.

The GPN’s requirement for local partnerships was seen as a potential threat to the profits of Mastercard and Visa, particularly from credit card fees. Previously, these companies could directly process Indonesian customer transactions through hubs in Singapore, bypassing local infrastructure.

Implications and Future Outlook

The ongoing negotiations underscore the delicate balance between promoting domestic innovation and attracting foreign investment. Indonesia’s QRIS, such as, has seen significant adoption, with transaction volume growing exponentially in recent years. As of Q1 2025, QRIS transactions have increased by over 200% compared to the same period last year, demonstrating its growing importance in the Indonesian economy.

The outcome of these trade talks will likely shape the future of Indonesia’s payment ecosystem, influencing the competitive dynamics between local and international players and impacting the contry’s broader economic relationship with the United States.