Bank Indonesia opens its own credit card network to shoppers

Bank Indonesia opened its domestic credit card system to ordinary customers on Monday, working with the country's large local banks. The system is called KKI, short for Kartu Kredit Indonesia. Until now it was not something a shopper could carry in a wallet. Nikkei Asia reports that Bank Mandiri is among the banks now issuing cards that run on it, and that the central bank is aiming at younger Indonesians, a growing group that is turning to credit cards.

The point of the system is where the payment goes. Today, when you tap a card in a Jakarta shop, the message that checks your card and moves the money is usually handled by a network based abroad. KKI keeps that step inside the country, which the central bank calls onshore processing. That puts the central bank in direct competition with Visa and Mastercard, which have long dominated card payments in Southeast Asia's largest economy.

For now, little of this is visible at the till. A card is a card, and the shop assistant will not know the difference. The change sits underneath: which company earns the fee on each purchase, and which country's system holds the record of the transaction. Both matter more when foreign exchange is tight or relations with a payment network's home country sour.

Why it matters

If you use a credit card, the practical test is whether a KKI card still works when you travel or buy from a foreign website, because a home-built network is only useful if it is accepted where you actually spend. Ask your bank before you switch. For shop owners, the question is whether processing at home eventually means a smaller cut taken from each sale, which is the main reason many small traders avoid cards at all.