While each bank and the financial firm is looking for different ways to handle cross-border payments quickly and reliably, Thailand and Indonesia have announced that they are piloting the use of QR codes for cross-border remittances.
With this, the merchants and users in either country would be able to send and receive payments in either country in a safe manner which will be a much simpler method for the merchants than many of the other digital payments and crypto wallet solutions that are currently available. This pilot is being carried out by respective central banks with the vision of introducing it for full commercial use in 2022. Such arrangements already exist between Singapore and Thailand as well as Malaysia and Thailand as well.
Mr. Sugeng, Deputy Governor of Bank of Indonesia, highlighted that “This initiative is a milestone of the Indonesian Payment System Blueprint 2025, especially in retail payments. It links cross-border payments through the interconnection of national QR codes of our two countries. One interesting aspect of this project is the use of direct quotation of local currency exchange rates provided by the Appointed Cross Currency Dealer (ACCD) banks under the Local Currency Settlement (LCS) Framework to improve the efficiency of the transactions, thus lowering transaction costs. The significant expected outcome of this first cross-border payment project is not only to facilitate transactions in the tourism sector but also to assist SMEs in tourist areas. This project will also increase financial inclusion, inclusive digital economy, and e-commerce transactions. This pilot, which BI calls an ‘industrial sandbox’, is on the path to further expansion of cross-border payments in the region.”
With this method, the users in Indonesia would be able to scan QR codes on their mobile payments applications and send overpayments to merchants in Thailand and vice versa. While such applications have been available in many countries for a long for local payments, it is only now that QR codes are being tried out for cross-border payments as well and they seem to be working in a much better secure, and reliable manner than many other forms of digital payment.
Mr. Ronadol Numnonda, Deputy Governor of the Bank of Thailand, said,”The Bank of Thailand underscores the significance of this cross-border payment system connectivity, having continuously pursued similar initiatives in the region recently under the ASEAN Payment Connectivity initiative. We believe that this cross-border QR payment will result in a safer, more efficient, and cost-attractive alternative for retail payments by the general public. Also, this service will assist e-commerce businesses during these challenging times and lay the foundation for the anticipated resumption of tourism and business flows. More importantly, our cross-border payment linkage with ASEAN’s largest country will be another key catalyst in transforming the way ASEAN citizens make payments abroad, thus contributing to regional economic prosperity and digitalization.”
This service, when commercially launched, is likely to be expanded so that the users would be able to make payments using just the mobile number of the recipient, just like how they now do for local transfers.