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ndonesia is to see a new, locally-based principal of credit and debit cards entering the country’s payment market, which is currently controlled by international payment technology companies Visa and MasterCard.

 Bank Indonesia (BI) director for payment system Y. F. Sri Suparni said in Jakarta on Tuesday that talks with the Indonesian Credit Cards Association (AKKI) regarding the establishment of a local payment company had become “more intensive” recently.

 She said that having a locally based payment company would improve the efficiency of the banking industry in the country, with banks being able to process the settlement of their transactions for credit and debit cards domestically instead of overseas.

“Actually, our bargaining power is strong because we have a strong domestic market. Besides, most of our [credit and debit card] transactions are conducted domestically, not overseas, thus we want the domestic economy to reap the maximum benefits,” she told reporters on Tuesday.

BI senior analyst at the accounting and payment system department, Aloysius Donanto, acknowledged that the locally-based payment company would face a difficult task competing in the country’s payment market now controlled by Visa and MasterCard. “Its business model, therefore, must be prepared carefully so it can survive the competition,” he noted.

“We are trying to establish a domestic brand that tries to challenge the dominance of a multinational brand,” he said. “Besides economic benefits we are also talking about national pride.”

As of July, there are 4.3 million credit cardholders and 67 million debit card holders in Indonesia, according to BI data. Transactions for credit and debit cards reached Rp 8 trillion and Rp 18.3 trillion per day, respectively.

According to data from the AKKI, over the last three years Indonesia has seen a more than a 15 percent increase in credit card transactions thanks to the country’s robust economic growth as well as its middle-class boom.

All issuers of credit and debit cards in Indonesia currently utilize Visa and MasterCard for the settlement for their payments, except Bank Central Asia (BCA), the country’s biggest player in the credit card market, which has its own clearing system to process its transactions.

However, the aforementioned financial service giants charge fees for Indonesian banks utilizing their networks and for their service to handle the settlement of the banks’ transactions.

“For banks, the advantage of paying fees to Visa and MasterCard is that we can utilize their world-class services as well as financial infrastructure,” Dodit Probojakti, the general manager of credit card division at Bank Negara Indonesia (BNI), told The Jakarta Post on Tuesday.

As long as the locally based payment company could provide the same level of services provided by Visa and MasterCard, BNI would support the policy, he said. Besides, currently 90 percent of BNI’s credit card and debit card transactions were actually conducted locally, providing room for a locally based company to compete with Visa and MasterCard to tap the country’s growing middle class. (sat)