Market Trends of Indonesia Payments Infrastructure Industry
Electronic Data Capture (EDC)
- Electronic data capture (EDC) machines/POS terminals are used for accepting payments at all retail outlets. They are basically devices used for cashless transactions.
- POS terminal systems evolved from being transaction-oriented terminals/devices to systems that can integrate with the company's CRM and other financial solutions. This evolution, thus, empowered the end-users with business intelligence to better manage their revenue streams and inventory. With the functional benefits that the advanced POS systems offer, companies have replaced their traditional billing software with POS systems, thus, securing the growth of the market.
- Additionally, mobile POS (mPOS) terminals have quickly evolved as an essential tool enabling merchants of all sizes to accept card payments. They are being used increasingly for payments, inventory management, printing bills, and offering loyalty programs across various industry verticals.
- Such trends are expected to spur strategic collaborations and innovations by the solution providers in the country. With the recent acquisition of MOKA by Gojek, connectivity between online delivery service and POS terminal appears to be on the horizon. Prior to that, Pawoon has made the first move for integration by connecting transactions from GrabFood into its system.
- Furthermore, new device innovation by the players aiming for SME businesses is expected to address significant market growth. In December 2020, Gojek, a Southeast Asian super-app operator, announced its new point-of-sale (POS) device, GoBiz Plus, for all-in-one purposes for micro and small- to medium-sized businesses (SMBs) in Indonesia.
- The device is a collaboration with PT Bank Central Asia and serves as an extension to the merchant super app GoBiz. GoBiz Plus works to help merchants accept cashless payment methods for offline transactions and embrace new digital strategies. The company stated that its services had aided over 900,000 retailers in accessing digital operations.
- Furthermore, players are investing in the digital solution, which integrates with POS solutions. In November 2020, Smart POS Terminal Z90 contributed to fintech LinkAja to promote mobile payment. Furthermore, the Southeast Asian ride-hailing and food delivery giant Grab led a Series B investment round in the Indonesian digital payments firm, LinkAja. Such steps are expected to augment significant market growth in the country.
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Consumer Payment Landscape
- The user base for digital payment methods in the country is on the rise, and consumers are increasingly using the technology on a regular basis. The growing number of e-commerce transactions and e-commerce users in the country is expected to act as a major factor in changing the consumer payment landscape.
- According to a study presented by Statista, the number of e-commerce users in Indonesia is expected to grow to 221 million in 2025, representing a significant increase since 2017, where e-commerce users stood at approximately 70.1 million users.
- Paypal, Apple Pay, Visa Checkout, and Google Pay are some of the major enterprises that command a prominent share of active users. Apart from this, the user acceptance of digital payments is increasing at an exponential rate where more and more users are ready to use these modes of payment.
- According to a survey conducted by WorldPay, in February 2020, about 84% of e-payment users stated that they used e-payment transactions to pay online purchases. Its convenience and practicality were the leading reasons why Indonesians chose e-payment transactions.
- Furthermore, OVO ranked first among the most-used digital payment platforms in Indonesia as of 2020, followed by Gopay and DANA. The security of the platform and its enriching customer services were the top reasons why consumers preferred these payment platforms.
- While GoPay is associated with Gojek and used exclusively for transactions within the app, OVO partnered with Gojek's biggest rival, Grab, and one of the largest e-commerce platforms in Indonesia, Tokopedia, to help secure its position as the country's most-used mobile payment service/app. Similar initiatives and collaborations by the payment platform providers are expected to further spur the growth in the adoption of digital payment methods by consumers.
