Bank Indonesia (BI) and the Indonesian Payment System Association (ASPI) launched Kartu Kredit Indonesia (KKI) on Aug. 17, enabling deferred QRIS payments to be processed domestically. While easier access to credit could support consumption and strengthen Indonesia’s payment ecosystem, it also carries risks. Without prudent lending standards, greater convenience could lead to higher household debt and deteriorating credit quality.

KKI builds on Indonesia’s existing QRIS payment infrastructure by allowing consumers to use the familiar QR-code payment mechanism for credit transactions. KKI transactions will be facilitated through the National Payment Gateway (GPN), enabling a larger share of retail payments to be processed domestically. This represents another step in BI’s gradual effort to strengthen domestic payment infrastructure, which began with the establishment of GPN in 2017 and continued with the launch of QRIS in 2019 to standardize QR-code payments.

QRIS has marked a significant breakthrough in Indonesia’s digital payment system by accelerating the digitalization of economic activity, particularly among micro, small and medium enterprises (MSMEs). Its reach has subsequently expanded beyond Indonesia through cross-border payment arrangements covering nine countries, including several Southeast Asian economies, as well as Japan and South Korea. QRIS transaction volume reached 12.55 billion in the first half of 2026, an increase of 100.12 percent from the same period in 2025. Its rapid adoption underscores QRIS’ growing role in expanding financial inclusion and deepening Indonesia’s digital financial ecosystem.

KKI could extend this progress into the credit-card market. Credit-card payments in Indonesia have traditionally relied heavily on global payment networks such as Visa and Mastercard, which together account for around 90 percent of the market. By providing a domestic alternative, KKI could introduce greater competition into the payment infrastructure while allowing local businesses to reduce some of the fees associated with foreign payment networks. This is particularly relevant for Indonesia, where credit-card penetration remains relatively low at around 5 percent, compared with approximately 35 percent in Thailand and 30 percent in Malaysia.

The integration of QR payments and credit cards is not entirely new in Indonesia, as Bank Mandiri has already enabled credit-card payments through QRIS. In KKI’s first phase, eight major banks will participate: Bank Mandiri, BCA, BNI, BRI, CIMB Niaga, PermataBank, Bank Mega and BSI. While the payment infrastructure will be domestic, responsibility for credit underwriting will remain with each participating bank. This distinction is important: KKI changes how credit is accessed and payments are processed, but the quality of the underlying lending will ultimately depend on banks’ credit assessments.

This is where the challenge begins. While KKI could make credit-card transactions more convenient, greater accessibility will not necessarily translate into healthy credit expansion. Overall bank lending growth has recently recovered to double digits, reaching 13.58 percent after a period of single-digit growth. Yet the recovery has not been driven primarily by household consumption.

Instead, overall credit growth has been supported by investment loans, which expanded by around 25 percent, while consumer credit grew by only 5.38 percent. Consumer credit growth has also slowed from 6.13 percent in April 2026. More importantly, signs of deterioration are emerging in credit quality. Consumer non-performing loans (NPLs) reached 2.5 percent in May 2026, up from 2.29 percent in May 2025. This suggests that efforts to expand access to consumer credit are taking place against a backdrop of increasingly strained household balance sheets.

Consumer purchasing power remains under pressure, reflected in the decline in the consumer confidence index from 127 points in January 2026 to 116.8 points in July. At the same time, layoffs reached around 43,000 workers between January and July 2026, with 11,416 workers losing their jobs in July alone. Weakening household confidence and employment conditions could constrain borrowers’ repayment capacity precisely as access to credit becomes easier.

The pressure on consumers is compounded by a relatively high interest-rate environment, creating an additional challenge for the banking sector. Banks have attempted to limit increases in lending rates despite higher benchmark rates, partly to avoid placing further pressure on borrowers. However, absorbing some of these higher funding costs has compressed banks’ net interest margins. Banks, therefore, face a delicate balance between expanding credit, preserving asset quality and protecting profitability.

KKI represents an important step in strengthening Indonesia’s domestic payment architecture and could help broaden access to formal credit while reducing dependence on foreign payment networks. Yet its success should not be measured solely by transaction volumes or the number of new credit-card users.

As credit becomes easier to access through an increasingly seamless payment system, underwriting standards must become more, not less, important. In an environment of weakening purchasing power, rising consumer NPLs and pressure on bank margins, the expansion of KKI should therefore be accompanied by prudent credit assessments, appropriate credit limits and effective risk monitoring. Ultimately, a stronger domestic payment system will support sustainable economic growth only if greater financial inclusion is matched by equally strong financial discipline.