Few days ago, Indonesia’s President Joko Widodo demanded the country’s authorities to distance themselves away from Western payment systems such as Visa and Mastercard and start using credit and debit cards issued by Indonesian banks.
According to Widodo, Indonesia needed to shield itself from geopolitical disruptions, including potential financial sanctions from the US, EU, and their allies.
“Be very careful. Visa and Mastercard could be a problem,” Widodo warned Indonesian officials.
According to this week’s reports, the Bank of Indonesia heeded the president’s warning and is preparing to phase out Visa and Mastercard while announcing the establishment of its own payment system.
Indonesian central bank’s spokesperson 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.”
According to Indonesian Credit Cards Association (AKKI) executive director Steve Marta, currently, Indonesia’s interbank system, GPN, supports only local debit cards and will require some adjustments to properly serve credit cards and international transactions.
