KUALA LUMPUR (Jan 27): Bank Negara Malaysia (BNM) and Bank Indonesia (BI) on Thursday (Jan 27) launched a cross-border QR payment linkage, enabling secure cross-border payments between the two countries.

In a joint statement, the central banks said the pilot phase begins Thursday, paving the way for a full commercial launch in the third quarter of 2022.

The banks said consumers in both countries will be able to make retail payments by scanning the DuitNow or QRIS (Quick Response Code Indonesian Standard) QR codes displayed by offline and online merchants, with the linkage to be expanded in the future to support cross-border remittances.

“The cross-border QR payment linkage between Malaysia and Indonesia marks a key milestone in the long history of collaboration between both countries. Phase 2 of the QR payment linkage between Malaysia and Thailand has also gone live this week.

“Such developments will bring us closer towards realising the vision of creating an Asean network of fast and efficient retail payment systems. This, in turn, will further accelerate our digital transformation and financial integration, for the benefit of individuals and businesses,” said BNM deputy governor Jessica Chew Cheng Lian.

BI deputy governor Doni P Joewono said the initiative links cross-border payments through the interconnection of national QR codes of the two countries, representing another milestone of the Indonesian Payment System Blueprint.

“This will give more options for users in the cross-border payment space and serve as a key to improve transaction efficiency, support the digitalisation of trade and investment, and maintain macroeconomic stability by promoting a more extensive use of the Local Currency Settlement (LCS) Framework.

“Through the use of direct quotation of local currency exchange rates provided by Appointed Cross Currency Dealer (ACCD) banks under the LCS Framework, it will improve the efficiency of transactions, thus lowering the transaction cost,” he said.

BNM and BI said the connectivity will further strengthen the close economic ties between Malaysia and Indonesia, adding that the tourism sector will be a big beneficiary of the initiative once international travel resumes.

Traveller flows between the two countries saw an average of 5.6 million arrivals per year prior to the Covid-19 pandemic, said the regulators.

The statement noted that both countries are also key remittance corridors for their nationals working abroad, who will benefit from faster, cheaper, and more transparent cross-border remittances, which is in line with the G20 Roadmap for Enhancing Cross-border Payments.

“This project is made possible with the collaboration of various stakeholders from both countries under the joint stewardship of BNM and BI. These include Payments Network Malaysia Sdn Bhd (PayNet), the Indonesian Payment System Association (ASPI) and RAJA (Rintis, Artajasa, Jalin, and Alto) as payment system operators. The settlement banks are CIMB Bank Bhd, Bank Mandiri and Bank Negara Indonesia. Other participants include various banks and non-bank payment service providers from both countries,” the statement added.

In June 2020, BNM commenced a similar initiative with the Bank of Thailand and completed Phase 1 of the project a year later in June 2021.

Under the first phase, users in Thailand are able to use their mobile payment applications to scan DuitNow QR codes to make payments to merchants in Malaysia including for online cross-border e-commerce transactions.

Under the second phase, which has also gone live, users in Malaysia are able to use their mobile payment applications to scan Thai QR codes to make payments to merchants in Thailand.