JAKARTA (TheInsiderStories) – Bank Indonesia (BI) inked a deal with Bangko Sentral ng Pilipinas (BSP) on Monday (02/03) to boost their ties in improving payment systems and digital financial innovation. The deal complements the previous central banks’ cooperation related to anti-money laundering and preventing terrorism financing in the field of payment systems and final settlement in 2018.
In a joint statement, the central banks said their Memorandum of Understanding (MoU) signed on Feb. 1 looks to “provide a framework of closer cooperation between the two central banks” in order to attain a “more secure, efficient and reliable payment system, and to promote digital financial innovation.” The MoU signed by BI Governor Perry Warjiyo and BSP Governor Benjamin E. Diokno in Manila, Philippines.
“The MoU signing was held to conclude a bilateral meeting between the two central banks which fruitfully discussed numerous advances in the digital economy and central banking, infrastructure financing using market instruments, and sustainable financing frameworks,” the joint statement said.
The agreement marks the concrete step of the two central banks towards inclusive finance through cooperation and the development of payment systems and digital finance, BI said in a statement.
Indonesia is expected to making gradual progress to reduce heavily cash-reliant, with card payments value set to increase from US$44.5 billion in 2019 to $57.1 billion in 2023, according to the recent report of GlobalData, a leading data and analytics company.
It reveals that similar growth could be seen in the card payment volume as well, from 1.0 billion in 2019 to 1.4 billion in 2023. The value of Indonesian card transactions is expected to see compound annual growth of 7.1 percent from 2019 to 2023, with the growth to be fuelled by the higher use of debit cards. In fact, debit card spending is likely to overtake credit cards in 2019, and will eventually make up half of all card transactions by value, the report said.
Among BSP’s initiatives to boost the payment sector is the National Retail Payment System (NRPS) which includes a framework and works through interoperable systems. Under the NRPS is the PESONet which is an electronic fund transfer (ETF) among banks which allows a batch of fund transfers to be credited to the receiver by the end of the banking date.
Diokno has said he eyes to have 50 percent of the volume of transactions done digitally by the end of his term in 2023. The United Nations-based Better than Cash Alliance report showed that the volume of e-payments usage in the country has already grown to comprise 10 percent of total transactions in 2018 from a mere 1 percent in 2013.
Moreover, e-payments also rose in terms of value to comprise 20 percent of total transactions in 2018 from eight percent in 2013. The BSP is positive that initiatives including the QR PH as well as the EGov Pay Facility, which allows payments to some government agencies online, will help boost digital transactions and promote a more cash-lite Philippines.
Written by Lexy Nantu, Email: firstname.lastname@example.org