Why does Indonesian Brands needs to sell in IDR

By Samuel Sabandar

 

1. Why Indonesian Businesses “Must Sell in IDR”

Indonesia’s Currency Law (UU Mata Uang)

Law No. 7 of 2011 on Currency (Undang-Undang Mata Uang) states:

All transactions conducted within the territory of Indonesia must use Rupiah (IDR).

What this means in practice

  • If the seller is an Indonesian legal entity

  • And the payment is processed in Indonesia

  • And the payment service provider is regulated in Indonesia

👉 The transaction currency must be IDR

This is the core legal reason why:

  • Indonesian companies cannot activate Shopify Payments

  • Indonesian companies cannot create Stripe accounts

  • Indonesian companies are forced to settle payments in IDR

Stripe / Shopify Payments require:

  • A supported country

  • A local bank account in that country

  • Compliance with local financial regulations

Indonesia is not a supported Stripe country, mainly due to:

  • Local financial licensing

  • BI (Bank Indonesia) regulations

  • Currency control and settlement rules

2. Common Misunderstanding: “International Customer = Foreign Currency”

Many merchants think:

“If my customer is overseas, I should charge USD / EUR”

❌ This is not legally correct for Indonesian entities

The location of the customer does NOT determine the currency
The location of the business + payment processing does.

So:

  • Indonesian company

  • Indonesian payment gateway

  • Indonesian settlement bank
    = IDR transaction

Even if:

  • The buyer is in the US

  • The website language is English

  • The shipping address is overseas

3. How Indonesian Businesses Can Still Sell Internationally on Shopify

✔ Option A — Sell Internationally, Charge in IDR (Most Common & Legal)

This is the default & safest approach.

How it works:

  • Shopify store base currency: IDR

  • Payment gateways:

    • Xendit

    • Midtrans

    • DOKU

  • International buyers:

    • Pay using credit card

    • Their bank converts USD/EUR → IDR automatically

Customer experience:

  • They see prices in IDR

  • Their bank shows:

    “IDR 1,500,000 ≈ USD 96.40”

  • Very common for Asian & global cross-border commerce

Pros:

  • 100% compliant with Indonesian law

  • Simple accounting & tax reporting

  • No legal risk

  • No offshore entity required

Cons:

  • Some Western customers are less comfortable seeing IDR

  • Exchange rate transparency depends on their bank

✔ Option B — Display Multiple Currencies, Settle in IDR (Recommended)

This is the best UX compromise.

How Shopify handles this:

  • Display currency ≠ settlement currency

  • You may show USD / EUR

  • Checkout still processes in IDR

  • Settlement goes to Indonesian bank in IDR

Tools:

  • Shopify Markets

  • Currency conversion apps

  • Custom currency switcher (display-only)

Important note:

Currency switching here is informational, not legal tender

You must clearly state:

“Final payment will be processed in IDR at checkout”

This is very common for:

  • Indonesian fashion brands

  • Beauty brands

  • Export-focused DTC brands

✔ Option C — Create a Foreign Legal Entity (Advanced / High Cost)

This is the only way to legally accept foreign currencies as settlement.

Typical structure:

  • Parent company: Indonesia (PT)

  • Subsidiary:

    • Singapore

    • Hong Kong

    • UAE

    • US (Delaware)

With this structure:

  • Foreign entity owns the Shopify store

  • Stripe / Shopify Payments activated

  • Settlement in USD / EUR

  • Indonesian entity becomes:

    • Manufacturer

    • Exporter

    • Fulfillment partner

Pros:

  • Full USD/EUR checkout

  • Higher trust for Western markets

  • Access to Stripe ecosystem

Cons:

  • Legal setup cost

  • Ongoing accounting & tax

  • Transfer pricing complexity

  • Not suitable for early-stage brands

💡 This is usually done by:

  • Large exporters

  • VC-backed startups

  • Enterprise brands

4. Why Shopify Payments & Stripe Are Not Available in Indonesia

Regulatory reasons

  • Stripe requires local financial licensing

  • BI & OJK regulations differ from Stripe’s operating model

  • Mandatory IDR settlement for domestic entities

Shopify Payments dependency

  • Shopify Payments = Stripe under the hood

  • If Stripe is unavailable → Shopify Payments unavailable

So:

❌ This is not Shopify’s decision alone
✅ It’s a regulatory and banking issue

5. Recommended Setup for New Indonesian Businesses

For 90% of Indonesian merchants:

Best practice:

  • Shopify base currency: IDR

  • Enable international shipping

  • Use credit card gateway that supports foreign cards

  • Display USD/EUR using Shopify Markets

  • Clearly explain currency conversion at checkout

This setup is:

  • Legal

  • Scalable

  • Tax-safe

  • Bank-safe

6. Simple One-Paragraph Recap

Indonesian law requires all transactions processed by Indonesian businesses to be settled in Rupiah (IDR). Because Indonesia is not supported by Stripe or Shopify Payments, Indonesian Shopify stores must use local payment gateways and settle in IDR—even for international customers. International buyers can still pay with credit cards, and their banks will automatically convert their currency. For full USD or EUR settlement, a foreign legal entity is required.

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