Jakarta. Starting Dec. 1, 2024, Bank Indonesia (BI) will waive the merchant discount rate (MDR) for transactions up to Rp 500,000 ($32) made through the Quick Response Indonesian Standard (QRIS) system. Transactions exceeding this amount will still incur a merchant fee.

“The 0 percent MDR for transactions up to Rp 500,000 at micro-business merchants aims to boost purchasing power among the middle-lower class,” said BI Governor Perry Warjiyo during a press conference following the Board of Governors meeting on Wednesday.

Previously, QRIS transaction fees were set at 0.3 percent for transactions above Rp 100,000, while those below that threshold were exempt from charges. MDR is a fee that merchants must pay to banks for using the central bank's digital payment services.

QRIS transactions saw substantial growth in the third quarter of 2024, surging by 209.61 percent year-on-year, with 53.3 million users and 34.23 million merchants, signaling a continued shift away from cash transactions.

“Digital economic and financial transactions in Q3 2024 continued to grow, supported by a secure and reliable payment system,” Perry added.

BI Deputy Governor Filianingsih Hendarta noted that QRIS has played a significant role in driving household consumption. The number of transactions reached 4.08 billion—163.6 percent of BI’s 2024 target—while the transaction value totaled Rp 188.36 trillion as of October.

“Retail, particularly food and beverage, is the largest sector for QRIS usage, representing 35.9 percent,” Filianingsih said.

QRIS, predominantly used by small and micro-businesses (92.47 percent), is vital in sustaining purchasing power among the middle-lower class, she added.

“The 0 percent MDR will allow merchants to save on transaction fees, enabling them to reinvest in their businesses, creating a multiplier effect on the economy,” Filianingsih concluded.

Meanwhile, the Central Statistics Agency (BPS) reported a 0.12 percent deflation in September 2024, marking the fifth consecutive month of deflation and raising concerns about weakening purchasing power.

Nailul Huda, Director of Digital Economy at the Center of Economic and Law Studies (CELIOS), said that rising taxes, fuel prices, and inflation are eroding the middle class’s financial stability, pushing many closer to poverty.

Middle-class income growth, hovering at around 1.5 percent, has been outpaced by the rising cost of goods, forcing many families to dip into their savings to maintain their lifestyle. A recent BPS report revealed a sharp decline in Indonesia’s middle class, from 57.33 million in 2019 to 47.85 million in 2024, while the "aspiring middle class"—those vulnerable to poverty—has grown to 137.5 million.

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