QR Code for Cross-Border Payment

Recently I had a short trip to Jakarta and I was exited when I could test the cross-border payment using QR code and it worked flawlessly!

I was in Jakarta two weekends a go for a short break.? My friend brought me to a restaurant near my home for lunch. It is the branch of chain of restaurants, Sambal Bakar Indonesia (translated: Fried Chili Indonesia).

The place is very popular. We went there just before lunch and in no time the place was full.

The first thing I noticed are two self-service order kiosks. This is rather unusual. In this kind of restaurant, typically we place the order by calling the waitress and tell her/him the food what we want.

I personally did not expect the Small and Medium Enterprises (SMEs) to embrace technologies, and yet this chain proofed me wrong.

After selecting our order, the kiosk prompted me with option whether to pay using cash (at the cashier) or using QRIS. I took my mobile, loged-in to my eBanking app and then scanned the QR code.? And it worked! I could made payment in Rupiah from my Singapore Dollar account.?

The transaction went very fast, as fast as when you make PayNow/PayLah payment locally in Singapore.? The exchange rate was also not too bad, quite close to mid-rate.

This is made possible by ASEAN’s initiative to integrate its members QR code payment systems. It allows people from one country to use their local bank’s application to make payment in another country (and using local currency).

For users, like me, it simplifies the cross-border payments. The credit cards, the de-facto cross-border payments system, are usually not accepted in small shops.

However, QR Code can be a game changer, especially for SMEs. Perhaps because it is relatively easy to setup QR code payment. It is also faster for the merchant to get the money from the transactions, as compared to credit cards.

Compared to credit cards, QR Code payment system gives credit cards a run for their money. Merchants may prefer QR Code payment simply because QR Code payment system typically has lower transaction fee as compared to credit cards.

QRIS, for example, imposes 0.7% transaction fee plus a small fixed fee.? It is much cheaper to at least 2.5% for credit cards. The QR code could also be integrated with Point-Of-Sales (POS) system or self-service kiosk, eliminating the need to rent the terminal, which is another cost savings.

We still don’t see it happening in Singapore in big way, people are used to credit cards.? However, soon or later merchants would realize the cost savings would be significant.

The QR Code payment system hopefully will spur up innovation in the financial sector.? For example, rather debiting my SGD account when making payment in other countries, banks could offer multi-currency wallet.? Bank’s customer could move money between wallets. The customers could then make payment in local currency (using QR code payment system) and the money would be deducted from the wallet of that currency, rather than from SGD account.? It is similar to YouTrip but without credit card.

However, the QR code is only one of the integration in ASEAN.? It is now possible to send money from Singapore (using PayNow/PayLah) to a person in Malaysia (using DuitNow) and vice-versa. The money would be converted to local currency.

If this scheme gets expanded to other countries, no doubt it would disrupt money remittance companies.?Rather than making a trip to remittance office, it would be as simple as logging in to the eBanking app. No doubt it would push many remittance companies out of business, however it would benefit customers as it would significantly reduce the cost for the money transfers.

Back to cross-border QR Code payment, there may be some implementation issues here and there. After lunch at that restaurant, I had no issue using QR Code to make payment at KKV shop at the nearby mall. Few days later I tried to make payment using QR Code at a food court located in big shopping mall in Jakarta and it failed ...

Will I make cross-border payment using QR Code again? Well, if the exchange rate is good and technical issue has been iron out, why not? It saves me from the trouble of carrying cash everywhere.

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And by the way this is the food we ate. Meals for 3 (even though there were only two of us) for 11 SGD :-) The chili is damn shiok!