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Banks target higher prepaid cards use from more coverage

As more Indonesians are becoming accustomed to using prepaid cards for their daily transactions, the country’s major lenders are looking to spread their tentacles to various segments grab more customers

Tassia Sipahutar (The Jakarta Post)
Jakarta
Tue, February 18, 2014

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Banks target higher prepaid cards use from more coverage

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s more Indonesians are becoming accustomed to using prepaid cards for their daily transactions, the country'€™s major lenders are looking to spread their tentacles to various segments grab more customers.

State-controlled lender Bank Mandiri is hoping to increase the amount of customers using prepaid cards to 4.5 million by the end of 2014, a 30 percent rise from the 3.5 million recorded last year.

Rico Usthavia Frans, Mandiri senior executive vice president for transaction banking, said the lender planned to issue prepaid cards that would target passengers of the Jakarta commuter trains.

'€œWe are looking to expand our prepaid business to the commuter trains by the second quarter of this year at the latest,'€ he said recently.

At the moment, Mandiri'€™s line of prepaid cards comprise e-money, e-toll, gas and Indomaret cards. By December 2013, the total transaction volume stood at 113.4 million, which generated Rp 1.51 trillion (US$127.38 million) in transaction value for the bank.

The e-toll card, launched in 2009, remains the key growth driver for Mandiri as it accounts for half of prepaid transactions, according to Rico. The e-toll card is used at specified toll gates, locally known as GTOs.

Rico predicted that the introduction of several new GTOs, currently being prepared by toll road operator PT Jasa Marga, would help increase the lender'€™s e-toll card users.

According to Jasa Marga finance director Reynaldi Hermansjah, his company plans to open at least 50 GTOs, which means that by there will be 126 GTOs by the end of 2014.

Similar to Mandiri, state-run Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI) are also aiming to boost the use of prepaid cards among their customers through their participation in the Jakarta commuter train and toll road transactions.

BRI deputy general manager for funding and banking services division Imam Subowo said he hoped the commuter train and toll road services would hopefully increase the number of Brizzi, the lender'€™s prepaid cards, users to at least 3.5 million from the current 2 million.

'€œPreparations are ongoing, both for the toll roads and the commuter trains. We expect to be able to enter the businesses in the first quarter. For the toll road, our prepaid cards business will be initiated through the Bali toll road,'€ he said.

Besides Commuter Line and toll road, Imam said that BRI planned to expand Brizzi'€™s market by penetrating several tight-knit communities, such as motorcycle and basketball communities, universities and schools.

 '€œWe cooperate with various merchants that cater to those niche markets, so that their customers can use our prepaid cards for their transactions,'€ he added.

BNI product management division general manager Dodit W. Probojakti said that they would focus mainly on the transportation and entertainment sectors.

 '€œI acknowledge the fact that we are still a rookie in this business, but we just launched a new system last November that will make use more competitive,'€ he said during a telephone interview.

Dodit said that the upcoming Java Jazz Festival '€” in which BNI is listed as one of the sponsors '€” would be a perfect avenue to promote its prepaid card, called Tap Cash.

Its latest data show that BNI has around 300,000 prepaid cards under its old prepaid system and 75,000 Tap Cash cards. It expects that the total number of its prepaid card users will surge to over 400,000 by year-end.

Meanwhile, Bank Central Asia (BCA), with 5 million Flazz prepaid cards, currently holds the biggest share in the market in terms of card numbers. Ina Suwandi, BCA funding and services division head, said that it aimed to post growth of 10 to 20 percent in 2014.

This year, Ina said, it would focus more on other transportation segments after entered the commuter line services last December.

PT KAI Commuter Jabodetabek (KCJ) commercial director Makmur Syaheran said that the company, which is a subsidiary of state-owned railway company Kereta Api Indonesia'€™s (KAI) oversees the Commuter train services, hoped the increasing passenger number would attract more and more banks to provide the passengers with their prepaid services.

'€œOur passenger numbers now stands at 600,000 per day and we expect that daily figure to reach 1.2 million by 2019,'€ he said.

Separately, Bank Indonesia (BI) deputy governor Ronald Waas said that the central bank expected the lenders'€™ prepaid cards systems to be synchronized in the future, enabling customers to access various services without having to use different prepaid cards.

'€œWe have a road map for that [sychronization], but have not decided on a deadline,'€ he said.

The synchronization road map garners positive response from the Indonesian Consumer Protection Foundation (YLKI), which lauds it as '€œhighly consumer oriented'€. '€œWe are looking toward the realization of a society that will use less cash in transactions. This sychronization can help make that happen,'€ YLKI chairman Tulus Abadi said.

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