Russian sanctions show Visa and Mastercard could become a ‘problem’, President Joko Widodo has warned
The leader of the world’s most populous Muslim-majority country says Indonesia must reduce its dependence on foreign payment systems to stave off the risk of potentially disastrous economic fallout if the country ever finds itself in the crosshairs. Western sanctions.
Addressing a business forum in Jakarta this week, Widodo argued Indonesia needed to protect itself from geopolitical disruption, citing a sanctioned attack on Russia’s financial sector by the US, EU and their allies. about the conflict in Ukraine.
“Be very careful. We must remember the sanctions imposed by the United States on Russia. Visa and Mastercard could be a problem”, Widodo said at a rally on Wednesday that encouraged the use of products and services made in Indonesia.
Last year, Indonesia launched a national government credit card (KKP) program to facilitate transactions between central and regional governments, and the president urged the public sector to lead the way in adopting this system and national systems, emphasizing that possibly “everyone should be able to use” bank cards issued in the country so that “We can be independent.
“If we use our own platforms, and everyone uses them, from ministries and local governments to city governments, then we can be more secure,” Widodo said, according to the Jakarta Post.
Indonesia’s national interbank system GPN currently only supports local debit cards and needs some tweaking to properly serve credit cards and international transactions, the executive director of the Indonesian Card Association of Indonesia told CNBC Indonesia on Saturday. credit (AKKI), Steve Marta.
Indonesia is a major economy, ranked seventh in the world with a GDP of $4.37 trillion based on purchasing power parity between Russia and Brazil.
Moscow rolled out its own national Mir card system soon after the US first targeted the country with sanctions in 2014, and prepared the internal National Payment Card System (NSPK) to support smoothly supports all Visa and Mastercard transactions if companies attempt to pull the plug. .
Last year, as Moscow was hit with new sanctions in response to its military operation in Ukraine, international payment systems did indeed halt their services, but locally-issued Western-branded cards continued to operate in the country. through the NSPK. Although these cards can no longer be used internationally, their expiration dates have been extended indefinitely to give users enough time to comfortably migrate to the Mir system.
Russia also has its own financial messaging system, SPFS, which secures transactions between banks inside and outside the country, and acts as a substitute for SWIFT which has blocked many sanctioned Russian banks.