Indonesia, one of the largest and fastest-growing economies in Southeast Asia, is experiencing a significant surge in the adoption of digital payments. The country’s population of over 270 million, combined with the widespread use of smartphones and government efforts to increase financial inclusion, have created a favorable environment for the growth of new and innovative payment systems.

Data shows that the use of digital payments in Indonesia is rapidly increasing. A report by Google, Temasek, and Bain & Company forecasts that Indonesia’s digital economy will be worth US$ 124 billion by 2025, with e-commerce expected to be the largest sector. E-commerce platforms like Tokopedia, Shopee, and Lazada have made it easier for consumers to shop online, and digital payments are the preferred mode of payment for most transactions.

E-wallets, which are mobile applications that allow users to store their money digitally, have become a popular payment method in Indonesia. As of January 2021, there were 55 million e-wallet users in Indonesia, up from 37 million in the previous year, a 49% increase. This surge in usage has resulted in e-wallet transactions growing by over 400% between 2018 and 2020, with the total transaction value reaching IDR 249.8 trillion (US$ 17.4 billion) in 2020, according to data from Bank Indonesia. The top three e-wallet providers in Indonesia as of January 2021 were OVO, GoPay, and DANA, which accounted for 87% of the market share.

Other digital payment methods are also gaining traction in Indonesia. The use of QR codes has become more prevalent, and the Quick Response Code Indonesian Standard (QRIS) system has become an increasingly popular method of payment. In 2019, the value of transactions made through QRIS amounted to IDR 40.6 trillion (US$ 2.8 billion), while in 2020, it reached IDR 140 trillion (US$ 9.8 billion), a growth of 244%.

The COVID-19 pandemic has accelerated the adoption of digital payments in Indonesia, as people look to minimize physical contact. A survey by Facebook and Bain & Company found that 77% of Indonesians are using digital payments, with 92% of them using digital payments for e-commerce transactions. The report also reveals that 90% of Indonesians are likely to continue using digital payments even after the pandemic.

Moreover, the rise of fintech startups in Indonesia has disrupted the traditional banking industry, with fintech companies leveraging technology to offer financial services such as lending, investment, and insurance. Digital payments are an essential part of these services, and they have played a significant role in driving the adoption of digital payments in Indonesia. As of 2020, the number of fintech startups in Indonesia has grown by 78%, reaching a total of 426 startups.

Real-time payments are a new way of transferring funds that provide a secure and instant transfer of funds between parties. This method of payment is becoming increasingly popular in Indonesia, where there has been a significant transformation in the payment industry over the last decade.

In Indonesia, the Central Bank, Bank Indonesia, has been working to promote the adoption of real-time payments in the country. One of the initiatives taken by the bank is the introduction of the National Payment Gateway (NPG) in 2017 and BIFast in 2021. The NPG is a platform that connects various payment systems in the country and enables real-time interbank transfers, making it easier for consumers and businesses to send and receive money.

According to data from Bank Indonesia, the value of transactions made through the NPG system in 2020 amounted to IDR 2,862 trillion (US$ 200 billion), up from IDR 2,355 trillion (US$ 165 billion) in the previous year. This represents a growth of 21.5% in the volume of transactions made through the platform.

The growth of BIFast transactions has been particularly significant in the B2B and C2C sector, where real-time payments are increasingly being used to facilitate business and retail transactions. BIFast is designed to handle high volume transaction and life cycle transaction with no more than 25 seconds. This breakthrough real-time payment will change the retail payment in Indonesia sooner or later.

Despite the growth in digital payments, cash still remains the dominant mode of payment in Indonesia, especially in rural areas where access to digital payment infrastructure is limited. However, the trend is expected to shift as the government and private sector continue to invest in building digital payment infrastructure and promoting financial inclusion.

Indonesia’s payment trends are rapidly evolving, with digital payments experiencing unprecedented growth. The rise of e-commerce, fintech startups, and government initiatives aimed at promoting digital payments have been instrumental in driving this growth. As the country continues to invest in digital payment infrastructure, it is expected that the trend will continue to grow, leading to greater financial inclusion and economic growth.

The evolving payment trends in Indonesia have created a need for robust and reliable payment solutions that can keep up with the pace of digital transformation.

(Yeremia, 2023)

Source

Google, Temasek, and Bain & Company. 2020. e-Conomy SEA 2020: Resilient and Transformative. Accessed Feb 15, 2023. https://www.bain.com/insights/e-conomy-sea-2020-resilient-and-transformative/.

Indonesia, Bank. 2023. 3 15. https://www.bi.go.id/id/publikasi/laporan-sistem-pembayaran-indonesia/Documents/RPSPI/RPSPI-2020.pdf.

Group’s, iPrice. 2023. State of E-Wallets in Indonesia 2021. 2 15. https://iprice.co.id/insights/mapofecommerce/en/state-of-e-wallets-in-indonesia-2021/.

Company, Facebook and Bain &. 2023. 2 15. https://www.bain.com/insights/digital-payment-in-indonesia-maximizing-the-potential-of-a-trillion-dollar-industry/.

Visa. 2023. 3 15. https://www.visa.co.id/dam/VCOM/regional/ap/Indonesia/VCPS/docs/2020-visa-consumer-payment-attitudes-study-indonesia.pdf.

Bank Indonesia. 2023. 2 15. https://www.qris.id/.