May 31, 2022
Indonesia, with 279 million people, is a fast-growing market for mobile payments, transitioning rapidly from cash to digital.
Digital Payment Landscape in Indonesia
With a sizeable population of 279 million,¹ Indonesia is one of the fastest-growing markets in the world for mobile payments. In the midst of a rapid transition from cash-centricity to digital and mobile payments,² Southeast Asia’s largest country by population presents an exciting and favourable environment for digital payments solutions to grow and flourish.
Indonesia’s digital payment landscape is reflective of the overall sentiment toward digital payments in the region. According to IDC InfoBrief, which is supported by 2C2P, it is predicted that there will be an additional quarter billion new e-wallet users in Southeast Asia by 2025, with Indonesia as the country with the largest addition of 130 million new users.⁷
The boom in digital payments is served by various digital payment platforms in Indonesia, including e-wallets, internet banking, and so on. There are currently five major mobile wallets available for consumers: OVO, ShopeePay, LinkAja, GoPay, and Dana.⁴ By 2021, the average person was already aware of five to six e-wallet brands, and e-wallet users tried at least three to four different apps. Users were also actively using two to three apps in the past month, with 44% using e-wallets at least four times a week.⁹
For digital banking, there are three types of players in the market:⁵ local commercial or rural banks that are well-acquainted with the local banking scene (e.g., Bank Bukopin, Bank BTPN), regional banks (e.g., OCBC, UOB, DBS), and fintech players (e.g., Sea Group, Gojek, Akulaku). In 2020, digital banking app downloads grew by 7% and new players were striking hard at fast, reporting growth of two to five times.¹⁰ Finally, bank transfers are also offered by local banks like Bank BRI, BNI, Mandiri, and BCA.
A major contributing factor in the acceleration of digital payments in Indonesia is the introduction of the comprehensive digital payments system, known as Quick Response Code Indonesia Standard (QRIS) by Bank Indonesia earlier in 2019. The system was developed with the objective of encouraging Indonesia's 65 million micro, small, and medium-sized enterprises (MSMEs) to adopt cashless payment systems.⁸
Much of this digital transformation has also happened due to the COVID-19 pandemic. Health considerations and safe distancing measures resulting from the pandemic have encouraged Indonesian consumers to favour the use of digital payments. A research study by Deloitte showed that, before the pandemic, only 32% of respondents chose bank transfer via mobile and internet banking as their preferred payment methods.³
Today, 159 million Indonesians make digital payments, reflecting a year-on-year increase of 14.9% or 21 million people. Digital payment and online banking numbers have risen to 37.7% and 7.7% respectively. In 2022, the total transaction value in the digital payments segment for the country is projected to reach US$71.41 million, while the market's largest segment, digital commerce, has a projected transaction value of US$67.21 million.⁶ The middle and lower class also represent the largest segment — i.e., 79% — of Indonesia’s population, presenting great potential for e-wallet adoption and digital payments usage at large.¹¹
Utilisation of Digital Payments in Indonesian E-Commerce
In Indonesia, digital payments are supported in both online and offline transactions. In 2020, the largest transactions came from retail (28%), online transportation (27%), food orders (20%), e-commerce (15%), and bill payments (7%).12 A 2021 survey showed that 81% of respondents used digital payments to pay for online shopping and simultaneously utilised this form of payment for chain stores (46%), local stores (36%), and public transportation tickets (38%).¹³
On top of these changes in consumer behaviour, digital financial services have also become critical enablers for businesses in Indonesia, with 98% of digital merchants now accepting digital payments in their stores.¹⁴
Businesses can engage in several ways to incorporate digital payments into their stores, such as by utilising a payment gateway and/or payment aggregator. The former is a software-based payment service that allows businesses to accept payments through their own websites or applications, while the latter is an intermediary service that facilitates online and offline payment systems for a store or merchant.¹⁵
SIRCLO Payments: State-of-the-art Solution for Small and Medium-sized Businesses
For brands, digital payments solutions present a variety of payment methods with seamless activation processes at competitive price rates. For consumers, digital payments provide ease of transactions, with customers able to choose their preferred payment methods and not having to carry large amounts of money. According to Ipsos, convenience is the main driver for 68% of consumers when choosing digital payments, along with promotions (23%) and safety (9%).¹⁶
Cashbacks and discounts are also significant drivers for digital payments adoption, particularly e-wallets, comprising the most significant contributor to the average of 3.2 wallets per consumer surveyed.¹⁷
Small and medium-sized businesses can facilitate online payments directly through their respective brand websites with SIRCLO Payments, one of the services offered on SIRCLO Store.
Launched in 2021, SIRCLO Payments is a payment gateway aggregator from SIRCLO’s collaboration with various financial partners and payment gateways to provide various digital payment options. It is driven by SIRCLO Group’s mission of helping everyone sell and initiated to serve merchants better in keeping up with the latest digital payments trends.
In addition to SIRCLO Payments, SIRCLO Store also offers ready-to-use templates for medium-sized businesses to help them build a webstore that facilitates online purchases. With the increasing need to establish brand presence on multiple online selling platforms, brands and merchants are supported by SIRCLO Store to sell through Marketplaces and Chat Commerce via one integrated management dashboard.
SIRCLO neither provides regulated advice nor guarantee results. The materials we convey reflect general insight and best practice based on information currently available, and do not contain all of the information needed to determine a future course of action. Such information has not been generated or independently verified by SIRCLO and is inherently uncertain and subject to change. SIRCLO has no obligation to update these materials and makes no representation or warranty and expressly disclaims any liability with respect thereto.
³ Have Indonesians’ Shopping Patterns Shifted Towards Digital?, Deloitte.
⁹ Digital Payment and Financial Services Usage Behavior in Indonesia, Kadence International.
¹¹ The Evolution of The Digital Wallet: Driving the Next Wave of Growth, Ipsos.
¹³ e-Conomy SEA 2021, Google, Temasek, and Bain & Company.