The Role of QRIS for Indonesian MSMEs in the Emergency PPKM Period

Covid-19 cases in Indonesia have experienced a significant increase lately so that the government must implement the Imposition of Emergency Community Activity Restrictions (PPKM Emergency) for Java and Bali regions. The regulation surely has a significant impact on various industrial sectors in Indonesia, including Micro, Small, and Medium Enterprises (MSMEs). However, if MSME players can embrace digitization appropriately, they can survive in this uncertain time. One of the usable digital services during this emergency PPKM period is the QRIS payment system for MSMEs in Indonesia.

QRIS stands for Quick Response Code Indonesian Standard. It is one of the digital payment system standards in Indonesia with the QR code scanning method. In short, sellers only need to register their business once at one of the Penyelenggara Jasa Sistem Pembayaran (PJSP) services to get a QRIS code. Meanwhile, buyers can make payments by scanning the sellers QRIS code through any supported service.

According to Bank Indonesia data, as of March 19, 2021, there are around 6.55 million sellers who have used the QRIS payment system, with the majority of users is 85% coming from MSMEs. The government also plans to encourage more Indonesian MSMEs to use QRIS this year, and their target is to embrace up to 12 million sellers by 2021.

Digitizing small and medium enterprises

Today’s technology has rapidly developed so that it brings changes in almost every aspect of life. It became one of the government’s backgrounds to accelerate the digitization of domestic business owners. President Joko Widodo even instructed and encouraged the acceleration of digitalization, especially for MSMEs.

MSMEs are one of the drivers of the Indonesian economy, which contributed 60.34 percent to the gross domestic product (GDP) in 2018. In addition, there are 116 million people, or 97.02 percent of the total workers in Indonesia, who are absorbed by the MSME sector. However, there are still not many MSME players who embrace the digital ecosystem.

Citing data from the Indonesia E-Commerce Association (idEA), MSME players who are incorporated into the digital ecosystem has reached 13.7 million players, or about 21 percent of the total MSMEs player, until May 2021. Therefore, the government targets 30 million MSME players to join the digital ecosystem by 2024.

However, when the Covid-19 pandemic spread and caused a world economic crisis, the MSME sector was also one of the hardest-hit sectors. Data from the Ministry of Cooperatives and SMEs states that at least 37,000 MSME players were affected during the pandemic.

A survey conducted by the Katadata Insight Center (KIC) on MSME players in Greater Jakarta in June 2020 found that 82.9 percent of business owners were affected by the pandemic. Even 63.9 percent experienced a decrease in turnover of more than 30 percent. Only 5.9 percent of MSMEs can reap profits amid a pandemic.

However, some MSMEs can survive by expanding and adding more types of sales and marketing channels. The large-scale social restrictions (PSBB) carried out during the pandemic are also seen as an opportunity to trade online. At least 80.6 percent of MSME players say that they feel helped by using the internet.

Cashless National Movement and Bangga Buatan Indonesia

For MSME players who understand the internet, digital technology can be used as a strategy to survive in times of crisis caused by the Covid-19 pandemic. MSME players can also selling their products or services through social media or marketplaces. In addition, adopting a digital payment system can also be a solution for transactions amid a pandemic.

Although the pandemic has hit the MSME sector quite hard, it is undeniable that the pandemic has also become a momentum for MSMEs to transform into a digital ecosystem. The number of MSME players who use technology to survive amid a crisis is not large, but the transition process shows positive movements.

To encourage the digitization of MSMEs during a pandemic, the government has issued many policies aimed at helping the stability of the nation’s economy. In addition, the government has also promoted the Cashless National Movement (GNNT), which launched at August 14, 2014, and the Bangga Buatan Indonesia (BBI) movement, which launched at May 14, 2020, to synergize in accelerating the digitization of MSMEs.

GNNT launched to create a safe, efficient, and smooth payment system, which in turn to encourage the national financial system to work effectively and efficiently. Meanwhile, BBI launched to encourage local industries to become pillars of national development and make Indonesia no longer dependent on imported products.

One of the strategies pushed by the government to make the two national movements successful is to encourage the expansion of QRIS implementation by synergizing Bank Indonesia (BI) representative office in the regions. This step is carried out with the hope that QRIS can become one of the gateways for MSMEs to connect to the digital ecosystem.

Since BI obliges the use of QRIS in 2020, the use of QRIS has also continued to grow rapidly. During the first year of QRIS implementation, transaction volume has penetrated 17.3 million transactions with a nominal transaction of Rp1.25 trillion from 5.94 million sellers. Quoting the statement of the Assistant Governor and Head of the Payment System Policy Department of Bank Indonesia Filianingsih Hendarta at Infobank, it was stated that out of the total nominal transactions, 95 percent came from MSMEs and 85 percent MSEs.

Benefits of QRIS for MSMEs during the emergency PPKM

The drastic increase in Covid-19 cases has forced the government to issue an emergency PPKM regulation that will take effect on 3-20 July 2020 in Java and Bali. The restrictions on activities this time are much stricter than before.

The tightening of these rules will have an impact on MSME players. However, if they learned from the previous activity restrictions, it should not be a big problem this time. By utilizing existing technology, MSME players can continue to carry out business activities without significant constraints.

For example, marketing can be utilized through social media, while product catalogs can be stored and sold through a local marketplace. If it is still too complicated, MSME players can still carry out marketing activities to buy and sell only by using chat applications and digital payment services that already support QRIS.

By using QRIS, MSME players can make transactions without having to make physical contact. In addition, QRIS also has a QRIS  TTM (Tanpa Tatap Muka), a feature that allows sellers and buyers to make transactions without meeting face-to-face. Thus, it can indirectly help the government manage the surge in Covid-19 cases because transactions occur without any social interaction.

QRIS TTM is also very easy to use. For example, a buyer places an order with a merchant directly through a chat application. After the order is confirmed and the price is determined, the sellers only need to send a picture of their QRIS code to the buyer. After that, the buyer saves the QRIS code to the gallery and uploads it back to a payment application that supports QRIS code scanning. If the QRIS code image has been scanned, the buyer only needs to complete the transaction.

The other benefits of QRIS for MSMEs are reducing the risk of loss due to fraudulent payments with counterfeit money, automatic recorded transactions so that transaction history can be viewed easily, ease of bill payments, sales of goods can be made non-cash without leaving the store, building a good credit profile so that it does not constrain when applying for a loan to a bank, the opportunity to get capital becomes greater, and many more.

With QRIS, it is expected that MSME players can also embrace digitalization which is currently happening and growing rapidly. Thus, MSME players can survive in the midst of an uncertain situation like now and can be one of the pillars of Indonesia’s economic resilience in the future.