The Indonesian central bank has unveiled plans to introduce a domestic payment system, seeking to cut reliance on the West. Jakarta wants to reduce its dependence on foreign payment systems, citing sanctions on Russia.
The Bank of Indonesia is preparing to phase out Visa and Mastercard while introducing its own domestic payment system, Antara news agency reported on Monday, citing the regulator.
Last week, Indonesian President Joko Widodo urged regional authorities to wean themselves away from foreign payment systems and start using cards issued by local banks. He argued that Indonesia needed to shield itself from geopolitical disruptions, citing the sanctions targeting Russia’s financial sector from the US, EU, and their allies over the conflict in Ukraine.
“Be very careful. We must remember the sanctions imposed by the US on Russia. Visa and Mastercard could be a problem,” he said.
Commenting on the initiative, the central bank’s spokesperson, Erwin Haryono, said that the regulator was in talks with local businesses “and the progress is about 90%,” adding that domestic cards will have many advantages, including lower fees. Also, according to him, “offshore settlements and dependence on foreign payment networks such as US Visa or Mastercard will no longer be necessary.”
Board member of the Indonesian Credit Cards Association (AKKI), Dodit Proboyakti, told RIA Novosti that Indonesia would apply the experience of Russia and its Mir payment system to promote the domestic financial network.
Indonesia’s interbank system, GPN, currently supports only local debit cards and requires some adjustments to properly serve credit cards and international transactions, according to AKKI executive director Steve Marta.
Moscow rolled out its own national card system, Mir, soon after the US first targeted the country with sanctions in 2014, and created the domestic National Payment Card System (NSPK) to smoothly take over all Visa and Mastercard transactions should the US-based companies pull the plug.