Tech Transforming Financial & Banking: Secure Payments, Efficiency & Quality - Essay Sample

Introduction

Technological Innovations are changing the operations of a different aspect of human life. Several advancements have come into place with the main aim of providing efficiency and quality services to the people. One sector that technology has influenced heavily is the financial and banking sector. For a long time, people have been looking for ways and means of making secure payments that do not come with many risks and where individuals do not suffer from setbacks and risks of losing their money (Wang, Putri, And Christianto, 2019, 2). Indonesia is one of the countries that have been implementing various technological Innovations to improve the quality of service provision and to have secure payment. One of the latest Innovations in Indonesia is the new system meant to ease payment that is being implemented by the Central Bank of Indonesia (Rosid, Evans, and Tran-Nam, 2016). The QRIS is a service that is intended to reduce the ongoing problem of fragmentation that has been experienced from the existing QR code standards (Sawitri, 2019). According to various findings, Indonesia has more than 26 QR code payments that are based services electronic payment. All these payment services have different specifications and models, making it difficult to have coherence in security. As a result, the bank has proposed for The QRIS that will start to parade on 1st January 2020. The main aim of this paper is to analyse and define the Indonesian economic readiness for the QR code international standard payment system, which has been proposed by the Indonesian bank to ease payment.

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The QRIS Code Payment System

The bank of Indonesia is currently putting in place various resources that are needed to achieve vision 2025. The Indonesian payment system is part of this vision and was launched in 2019 by the bank of Indonesia ("BI"). This payment system has launched a quick response code ("QR") which is known as quick response code international standard ("QRIS") that will be successfully used in performing or electronic payments. All the payments done using the system will either be server-based electronic payment, mobile banking and electronic wallet throughout Indonesia. The QRIS started, its operation on 17th August after some of the pilot and testing programs, was launched in November 2018. The implementation of this program is expected to improve efficiency in the payments system and to improve the financial inclusivity. The long-term name of the program is to support small and medium-sized enterprises and to improve the overall macro economy.

Overview of the Program

The Quick Response Code Indonesian Standard ("QRIS") was created by the bank of Indonesia in conjunction with Indonesian payment system Association or the (Asosiasi Sistem Pembayaran Indonesia ("ASPI")) that was focusing on international standard. ASPI as the main standard that has been approved to be responsible for the creation of the QRIS and its management as a whole. During the initial stages of its implementation, the bank of Indonesia forecast on working with QRIS program on merchant-based mode. In this mode, the merchant displays the QR code on that is supposed to be scanned by the client or the customer. It is an idea which was the opposite of the previous model, which was the customer presented. The previous model allowed customers to display the QR code before it is scanned by the merchant.

Status on the Economy

Deciding whether an economy is ready for a new payment system requires an understanding of the ongoing industry and the economic situation in the country (Frazee, 2016, 2). A new payment system will require that people understand the rules, regulations and policies that are used in this new system (Muttaqin, Arifin, and Wajdi, 2016, and World Health Organization, 2017, 1). The Indonesian economy is the largest in the whole of Southern Asia and is one of the highest emerging markets in the whole globe (Hull, 2017, 3). As a member of the G20, it is a country that is classified to be experiencing the fasted growth in the region. Worldwide, Indonesia ranks at number sixteen as the largest economy in the world based on its nominal gross domestic product and his seventh largest economy based on the general GDP (Cheetham, 2016, 2). When implementing a technological innovation, it is important to consider how people will adjust to the new innovation. One way of knowing this is through looking at the literacy rate and how many people have access to technology that will be used in implementing the system (Susanti, 2017, 2). Indonesia has an adult literacy rate of 95.38%. This makes it number 58 in the whole world in terms of literacy. It means that almost everyone in Indonesia understands the operations of technology and therefore is well-prepared for the changes that may involve different adjustments.

Key Implementations for QRIS

This is a payment transaction that involves various parties. The first one is that it is a payment system that involves a payment system operator who can be a front-end operator like a credit card or a debit card issuer. It must also involve as switching institution that has been appointed by the bank of Indonesia so as to carry out all the responsible switching activities at the National payment getaway and it is a process that has to be approved by the bank of Indonesia to process the transactions of QRIS directly. The other component is there merchant aggregator who is a party carrying out all the acquisitions of the Merchant activities to settle pay-outs from the QRIS merchant transactions. This has to take place under the approvals of the bank of Indonesia Corporation with the payment operator. A national merchant repository manager also has to be present who is a system administrator of the merchant's data (Sangka, 2016, 2). The manager can be part of the Bank of Indonesia or a different party that has been appointed by the bank of Indonesia.

Under PADG 21/18, it is recommended that a service operator have to get approval from the bank of Indonesia before they can provide payment services that are based on QR code. Obtaining the approval requires the operator to submit documents that have been set under PADG 21/18. In case the operator takes part during the implementation of the pilot program of QRIS, the needed documents have to be different. Additionally, the operator has to get QRIS documentation that has technical operations specific to QRIS from institutions that are standardized. The nominal amount that is standardized for every QRIS transaction is there IDR that amounts to 2 million. Electronic money that comes in the form of a card-based payment is issued to determine the monthly or daily accumulative amount of the transactions conducted under QRIS. The cumulative amount of transaction that is allowed to be conducted by a customer is based on the risk management that has been determined by their financial institution (Budiman et al., 2016, 2). Payments transactions that use of show administrative sources of funds or those that are issued hasn't eaten in Asia have to be registered before allowing them to use the QR code-based transactions. an application to use QR code-base transaction all also depends on the funds that are administered at offshore level after issuing payment instruments Kontakt in Indonesia. An example is a cure-based payment services that are used by foreign tourist to contact local transactions in Indonesia. In relation to the regulations that have been provided by the I Regulation No. 20/6/PBI/2018 in conducting transactions on electronic money, QRIS payment services used funds that I've only been issued by the bank under Indonesian laws.

How to Transition Into the System

QRIS payment methodology will start a nationwide operation from 1st January the year 2020. The existing players in the market have been given a transition period that ends on 31st December the Year 2019. After that, they are expected to migrate so as to implement the newly-implemented QRIS so as to obtain approvals from the bank of Indonesia.BI requires that any corporation that conducts Merchant Services should get approval by 31st December 2019.

Conclusion

In conclusion, the QRIS code-based payment system is meant to minimize the ongoing fragmentations presented by QR code standards that is currently in operation. According to the bank of Indonesia, there are more than 26 QR payment services that have different models of operation. However, when QRIS is put in place, all the merchants will not have to implement different standard codes that come from different issuers. QRIS system presents numerous advantages, including providing an interconnected payment system that cannot be compared with any other system that has been implemented anywhere. Hence, this paper has analysed the Indonesia economic readiness for QR Code Indonesian Standard, the Bank Indonesia's new system to ease payment. From the analysis, it is evident that Indonesia, as a country is prepared and ready for this payment system that will be implemented at the start of 2020. As a country that people have access to technology and literacy rate is, it will be easier for people to adjust with the help of the international bank together with other organizations that are concerned with this new innovation.

References

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