The Indonesian government is preparing to launch the National Government Credit Card (KKP) network in 2023. The KKP is a method to pay state expenditures within central and regional governments. KKP will be issued by State Owned banks namely BRI, BNI and Bank Mandiri. At a later stage, KKP is targeted to be used by 20 million merchants domestically and abroad. Currently, the Payment System Association (ASPI) and the National E-Transaction Settlement (PTEN) as KKP organizers are preparing the infrastructure readiness and cooperation mechanisms with switching institutions.
In line with the effort to build a national electronic transaction system, President Joko Widodo urged regional administrations to leave foreign payment networks, quoting the example of risks that appear from the U.S. sanctions against Russia. However, in terms of the concern that Indonesia will enforce a fully local credit card network, experts argue that Indonesia’s homegrown interbank network would require further developments to be able to serve more than debit cards. Acquiring capabilities to compete with international platforms would require local providers to build new infrastructure and networks across the continent at an unreasonable time and cost. This would also contradict Indonesia’s goals to be a leader in the digital economy ecosystem in the region.
The executive director of the Indonesian Credit Card Association Steve Marta said that although Indonesia needs to build a domestic credit card network, it would still depend on market mechanisms. “If locally issued credit cards cannot compete with foreign counterparts, customers could face consequences, such as much higher interest rates with domestic cards,” Marta added. Therefore, Marta suggested that domestic credit card services must continue to be developed to keep up with the times.
