Electronic Money Platform is Increasingly Important Online Commodity

People in big cities have become more and more fluent in using electronic money for their daily needs. This is offset by the increasing number of services that accept payments using e-money, such as transacting at toll gates. According to Bank Indonesia data, in total in January 2018, with 27 licensed electronic money providers, the nominal transaction value reached 3,49 trillion Rupiah with the number of transactions reaching more than 215 million.

Electronic money products, especially server-based ones, are an important instrument for digital payments given the low penetration of credit cards in Indonesia. Go-Pay and Tcash are arguably ahead in this segment, while Tokopedia, Bukalapak, Shopee, Paytren, and Grab still awaiting the fate of their application since the e-wallet product was frozen by Bank Indonesia.

Bank Indonesia confirms that electronic wallets that collect circulating funds (floating funds) above one billion Rupiah must apply for a permit before operating.

Collaborate with license holders

Delays in acquiring electronic money licenses have more or less disrupted various startup plans and innovations. To overcome this, a number of startups started taking shortcuts. GrabPay took advantage of the Ovo license to re-open its electronic wallet, while TravelokaPay partnered with Uangku owned by Smartfren.

We don't know yet what the detailed terms and conditions of the two are, but at least they are GrabPay and Ovo have no wallet integration. Both are purely separate platforms and GrabPay simply "borrows" (or rents) the Ovo license.

By attracting existing license owners, these startups do not run into regulations when they want to explore further expansion steps. Until now, various surveys show that people still prefer to use transfers between bank accounts to make online payments. Bank Indonesia hopes that electronic money solutions will gradually replace this method.

Next competition

According to a survey conducted DailySocial, Go-Pay is the most popular server-based e-money platform, while Mandiri e-money is the most popular card-based e-money.

With server-based Go-Pay, Ovo, and Tcash now set up to accommodate payments using QR Codes, there will be a market wedge between card-based and server-based electronic money.

Go-Jek itself has stated that it will go all out to support a wider Go-Pay presence. This step begins with the acquisition of two payment gateway platforms, Kartuku and Midtrans. Kartuku is strong in the retail realm, while Midtrans has a base in the online realm. The implementation of Go-Pay through these two payment gateways will encourage wider acceptance at various merchants, beyond the daily use of Go-Pay that consumers are already comfortable with.

The competition to become a "second wallet" is getting tougher. With regulators that are still sacred in enforcing the rules, it is not impossible that Tokopedia, Bukalapak, Shopee, or other big platforms will follow in the footsteps Grab and Traveloka for hitchhiking licence. Electronic money platforms are increasingly becoming an important online commodity and electronic money licenses are becoming a high-value item today.

- Prayogo Ryza contributed to the creation of this article