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Why Digital payment systems in Indonesia are key to economic growth in 2023

According to recently published research, Indonesia's 2023 major economic objectives include a Digital Payment system.

Photo by Vlad Busuioc / Unsplash

According to recently published research, Indonesia's 2023 major economic objectives include a Digital Payment system.

The growth of digital payment

According to a recent study (1) from the Bank of Indonesia, creating a Digital Rupee and digitizing payment systems are two key components of the country's 2023 economic growth goal. This will entail expanding the accessibility and use of electronic wallets and internet banking. Since the National Payment Gateway (NPG), the country's first national e-payment system, was introduced in 2019, the government has been actively encouraging the usage of digital payments.

To increase the nation's economy, the Indonesian government recently announced intentions to introduce a digital rupee in 2023. economic expansion The Digital Rupee will be a digital currency created and administered by the nation's central bank, Bank Indonesia, and is anticipated to be introduced shortly through a project with the codename "Project Garuda."(2)

What would this change?

By giving people, companies, and other stakeholders access to digital payment services; the Digital Rupee aims to encourage financial inclusion and economic progress. Additionally, it is anticipated to lower transaction fees and streamline payments. Indonesia is constructing a dependable digital payment system using a three-pronged strategy. According to the Central Bank's study, the government will use a three-pronged strategy to create a national digital financial infrastructure.

The Bank of India (3) will first provide the basis upon which the whole payment system will be built and will be motivated by impartial regulatory policies, encouragement of innovation, and end-to-end consolidation. The institution will also develop an integrated, interoperable, and networked payment system architecture. This will hasten inclusion and lower transaction costs throughout the payment sector. The central bank will promote ethical business practices and create an egalitarian payment sector market. The introduction of the Digital Rupee, which will be accessible through mobile wallets and banks to enable users to make payments and transfers simply and conveniently over the blockchain, will be made feasible by an integrated and interoperable payment system.

The expected outcomes

The government anticipates that the Digital Rupee will aid in promoting economic growth, transaction costs reduction, and financial literacy. The Incentives and subsidies will be given to companies who accept the Digital Rupee as a means of payment as part of the government's aim to promote its adoption. The Digital Rupee is also anticipated to aid in lowering the risk of fraud and money laundering.

By 2023, the government wants at least 10% of all payments to be done digitally. It is trying to develop digital literacy, boost access to digital payment systems, and encourage the usage of digital payments through public awareness campaigns and incentives to accomplish this goal. The government is also spending money on infrastructure and technology to improve the security and effectiveness of digital payments. The plan includes a section devoted to advancing digital Payment systems for both big and small and medium-sized businesses.