China, Indonesia Launch Cross-Border QR Payments

China and Indonesia have launched a new cross-border QR payment system. This initiative represents a step in Beijing’s drive to build a regional digital payments network. It aims to internationalise the yuan and reduce reliance on the USD.

Credit: ALIPAY

Users can now employ domestic mobile applications, including China’s Alipay, and Indonesia’s QRIS, to scan QR codes. This allows for retail payments in either country using their home currencies.

Chief Economist Alicia Garcia-Herrero for the Asia-Pacific region at French investment bank Natixis described the move as a practical step towards deeper financial ties. Garcia-Herrero stated this would reduce transaction costs and currency risks for both sides.

She commented, "For Beijing, the primary drivers appear to be advancing dedollarisation efforts, promoting the international use of the yuan and strengthening economic integration with key Asean partners amid broader geopolitical pushes for financial autonomy."

Indonesia’s central bank announced the initiative’s launch, according to The Jakarta Globe, a local news outlet, and Xinhua, a Chinese state-run news agency. Beijing has recently increased financial connectivity across ASEAN, its largest trading partner in bloc terms.

Chinese visitors in Thailand have been able to use domestic digital wallets to pay local merchants in yuan since late Oct. Visitors to Vietnam have used UnionPay for payments since Dec., with the service expanding last month to include Alipay. Malaysia and Singapore also have similar services available.

Garcia-Herrero expects Beijing to introduce similar arrangements with more Association of Southeast Asian Nations members and other partners this year. This aligns with China's continued expansion of its digital and financial footprint.

China’s push for cross-border payments aligns with its broader goal of yuan internationalisation. This is considered crucial for reducing reliance on USD-dominated channels. It also addresses concerns over the American currency's weaponisation amid rising bilateral tensions with Washington.

The Cross-border Interbank Payment System, CIPS, is also central to Beijing’s strategy as an alternative to Western-led financial networks. Garcia-Herrero expects global yuan payments growth to remain robust this year. She noted an increasing number of overseas banks are now direct participants in CIPS, which boosts connectivity and settlement efficiency.

Deputy Governor Zhu Hexin of the People’s Bank of China met central bank leaders from ASEAN, Japan, and South Korea in Uzbekistan. They discussed regional cross-border payment cooperation.

A crucial goal of these initiatives is to encourage spending by foreign visitors to China. Domestic, mobile-first payment systems have historically been a barrier for international tourists there.

Tourism between China and Southeast Asia surged last year. This surge was supported by visa-free travel policies and simplified entry requirements.

Indonesia recorded 1.34 million Chinese visitors last year, its highest total in six years. These visitors accounted for 8.7% of all international arrivals, making China Indonesia's fourth-largest source of tourists. China also ranked as the fourth-most popular travel destination for Indonesians last year. It accounted for nearly 6.8% of the country’s total outbound departures.

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• China and Indonesia launched a new cross-border QR payment system.

• Users can make retail payments in either country using apps like Alipay and QRIS.

• The initiative aims to internationalise the yuan, reduce USD reliance, and strengthen regional financial ties.

Source: SCMP