Businesses worldwide now have a new gateway to explore e-commerce opportunities in key Asian markets like Indonesia. With advancements in digital wallets, and other novel payment methods like Account to Account payments, local and global brands are taking a slice of the Indonesian market and getting paid in more ways than one.
Learn how to navigate the Indonesian payment landscape using the guide we've put together below.
If you plan to expand your business in Asia, Indonesia may be an ideal entry point. Indonesia is a large marketplace. Its population in 2023 was 277.3 million, which is projected to grow to 287.29 million in 2027.
Given its population size, Indonesia represents a broad customer base with massive consumption and spending. In 2023, the country's Point of Sale (POS) market size was US$636 billion, expected to increase to US$773 billion in 2027.
The country has traditionally been cash-heavy, with half of Indonesian adults being either unbanked or underbanked. But in recent years, increased internet usage and the popularity of digital wallets have contributed to the country's shift toward becoming a cashless society.
Likewise, Indonesia's e-commerce market, the largest in Southeast Asia, is poised for growth. The e-commerce market size was $45 billion in 2023 and is expected to increase by 10% to $67 billion in 2027. Active online spenders in Indonesia spend on e-commerce, travel, streaming, and gaming, among others.
Customers in Indonesia can choose from various payment methods. Here are the top five methods consumers prefer and trust:
Digital wallets are Indonesia's leading e-commerce payment method, expected to lead both e-commerce and POS payments by 2027. The e-commerce transaction value was estimated at 40% in 2023 and is forecasted to increase to 47% in 2027. The POS transaction value was 32% in 2023, expected to increase to 49% in 2027. Indonesia's most popular digital wallet providers include DANA, GoPay, LinkAja!, OVO and ShopeePay.
Digital wallets are Indonesia's leading e-commerce payment method
Cash payments remain essential to Indonesian customers, especially for their POS transactions. However, the use of cash is forecasted to lower in the coming years. The POS transaction value of cash payments was approximately 38% in 2023, slated to decrease to 25% in 2027. Cash payments still come up in a few online transactions, accounting for 10% of the e-commerce transaction value in 2023.
A2A involves the transfer of funds directly and instantly from one bank account to another without relying on card networks or payment intermediaries. This payment method has gained popularity in online transactions. For instance, the e-commerce transaction value of A2A payment methods is estimated at 28% for 2023 but is projected to increase to 32% in 2027.
Credit cards are still relevant among Indonesian customers but are losing steam to digital wallets. The e-commerce transaction value of credit cards was only 10% in 2023. This is expected to further decrease to 7% in 2027. The POS transaction value was also relatively low at 11% in 2023 — this is expected to decrease slightly to 10% in 2027.
In 2022, Indonesia's most popular credit card providers were Visa, Mastercard and GPN. Visa accounted for 42% of credit cards in circulation in the country, while Mastercard accounted for 26.2%. Indonesia's local payment brand, GPN or Gerbang Pembayaran Nasional or National Payment Gateway, which offers credit card services, is also gaining traction.
While debit cards are part of Indonesia's top five payment methods, they are becoming less and less popular in Indonesia as more people use digital wallets for payments. The e-commerce transaction value of debit cards is estimated at 7% in 2023. The POS transaction value is estimated at 15% in 2023 and is projected to decline to 12% in 2027.
Indonesian customers also use payment methods other than the five mentioned above, but minimally. In 2022, 3% of e-commerce transactions were under the Buy Now Pay Later (BNPL) scheme. Customers also use prepaid cards and pre-pay methods in e-commerce transactions and POS financing and prepaid cards in POS transactions.
Indonesia is one of the world's fastest-growing markets for digital payments. One of the factors contributing to its ever-expanding digital economy is active government involvement in regulating and supporting secure cashless payments.
The government's ultimate goal is financial inclusion across the archipelago, transforming Indonesia into a cashless society. To achieve this, Bank Indonesia, the country's central bank, rolled out two key services: BI-FAST and QRIS.
BI-FAST stands for Bank Indonesia Fast Payment and is Indonesia's fund transfer infrastructure that bridges bank accounts and digital wallets. It allows people and businesses to send and receive money instantly, straight to (and from) their preferred account or e-wallet. BI-FAST has become the backbone of Indonesia's payment system for real-time retail transactions.
QRIS is another initiative by Bank Indonesia that extends from the BI-FAST initiative. QRIS or Quick Response Code Indonesia Standard (Kode QR Standard Indonesia), is a QR Code system compatible with different payment provider platforms. It standardises non-cash payments for business owners who can set it up quickly without any special equipment.
However, government regulation also limits specific digital sectors. For instance, it banned e-commerce imports valued below $100 and direct transactions on social media platforms like TikTok. With social commerce gaining traction and the Indonesian government digitisation push, this could very well change in the near future.
Consumer choice is fuelling the complexity of Indonesia's payment landscape. More customers now prefer contactless transactions to cash payments. Imagine an office worker's daily commuting routine. Along the way, they buy food from a convenience store or a food kiosk, and before going home, they shop for groceries. They can pay for all these transactions digitally.
The gross transaction value (GTV) of Indonesia's digital payments is forecasted to grow from $313 billion in 2023 to $417 billion in 2025 and ~US$760 billion in 2030. The digital payments GTV includes the value of transactions made via digital wallets, A2A, credit cards, debit cards and prepaid cards.
This growth in Indonesia's digital payments has room for big brands and small businesses alike, local and global. For instance, a Europe-based travel and tours business can market its services, while a US-based footwear brand with no physical stores in Asia can sell its products to Indonesian customers. The ease of digital payments makes cart abandonment less likely.
As Indonesian consumers reduce their reliance on cash, online merchants can position themselves to receive instant payments digitally. Offering popular payment methods can boost chances of winning a slice of the Indonesian market and improve e-commerce sales. There's research to support this, too. A study found that APAC buyers may abandon their cart if they can't use their preferred payment method or have payment security concerns.
Businesses can take advantage of Antom's payment platform to offer payment methods that are popular worldwide. As a business owner who prioritises efficiency and security in online payments, you can leverage Antom's risk management capabilities to keep local and international transactions safe from fraudulent activities too.
Unlocking the power of digital wallets that operate regionally can help drive sales in Indonesia and the rest of Asia. Choose the best payment methods to grow your business operations in Indonesia.
Contact us to learn more about tapping into Indonesia's payment system with our single integration.