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View all search resultsBank Indonesia (BI) has officially imposed fixed fees for transactions using recently implemented standardized quick response (QR) codes as it aims to have 15 million merchants using e-wallet services in 2020
ank Indonesia (BI) has officially imposed fixed fees for transactions using recently implemented standardized quick response (QR) codes as it aims to have 15 million merchants using e-wallet services in 2020.
The central bank has set a merchant discount rate of 0.7 percent for almost every transaction using the Quick Response Indonesia Standard (QRIS). Transactions using the QRIS in the education sector and at gas stations charge 0.6 percent and 0.4 percent of fees, respectively.
Meanwhile, QR code transactions for donations or social assistance will be free from any costs.
“Bank Indonesia will conduct evaluations every so often for rate revisions,” BI payment system management executive director Pungky P. Wibowo told reporters during a press briefing held in Makassar, South Sulawesi, on
Saturday.
“We will probably lower the fees but worry not because, in 2030, around 98 percent of the population will make cashless payments so the industry will get an abundance of profits.”
BI launched the QRIS in August last year and officially implemented the system in January, allowing users from one payment service to transact with any other rival service within BI’s ecosystem in a bid to encourage cashless payments.
Cashless transactions have seen a rapid rise in Indonesian society, whose internet economy is expected to grow more than three times to US$130 billion by 2025 from $40 billion last year, as shown in the e-Conomy SEA 2019 report by technology giant Google, Singaporean holding company Temasek and management consulting firm Bain & Company.
The number of cashless transactions in Indonesia increased to over 2 billion in 2018, accounting for around 20 percent of the total 10 billion transactions in Southeast Asia, according to 2019 Southeast Asia E-Money Market, an inaugural report commissioned by Standard and Poor’s (S&P) Global Market Intelligence and published recently.
Pungky explained that the fees earned on e-wallet transactions would have to be split five ways under the new system including for the e-wallet companies, middle-men payment processors, switching companies, the country’s standardization institution and the National Electronic Transaction Settlement — a consortium of major Indonesian lenders.
The fixed fees for QRIS transactions are relatively lower than those using debit cards on electronic data capture machines, which can be as high as 1 percent of the transaction value.
However, things might not be easy for e-wallet service providers.
The providers had customized fees for vendors before the regulation took effect, charging a premium from big retailers and absorbing costs for smaller merchants to get them to use their platforms, according to a Reuters report.
Indonesia’s e-wallet industry is dominated by local players, namely Alphabet’s Google-backed GoPay in the first position, followed by OVO, which is backed by conglomerate Lippo Group and ride-hailing app Grab, Ant Financial’s e-wallet DANA and state-owned payments platform LinkAja based on monthly active users, according to App Annie’s 2019 second quarter data published in August.
“This will hurt all of us,” said an executive at an Indonesian e-wallet firm, who was not authorized to speak to media and did not want to be named, as reported by Reuters.
Bain & Company partner Aadarsh Baijal said during a recent exclusive interview with The Jakarta Post that there was not a lot of revenue for e-wallet platforms. “Although the gross transaction value is very large, the revenue pool is not because of the pressure on the margins.”
Despite concerns that the fixed fees policy could choke a key revenue stream, big e-wallet players have chosen to remain optimistic that the regulation will have a positive impact going forward.
LinkAja spokeswoman Putri Dianita told the Post the policy would benefit the industry even though her platform would receive fewer earnings due to the fixed fees.
“We are OK with it as the standardized system will create healthy competition among digital money players,” Putri said, adding that LinkAja would need time for full QRIS implementation “as merchants will need to adjust to the new system”.
“Since the average transaction value using the e-wallet is not too big, I think merchants would not mind bearing this fee themselves,” Putri said, adding that the company currently handled around 250,000 merchants nationwide.
Meanwhile, OVO spokeswoman Sinta Setyaningsih decided not to comment on the transaction fees but concurred that the QRIS would boost cashless transactions for people of various backgrounds.
“Our vision is to enhance equal access among Indonesians so we are pushing for more collaboration with many parties to boost financial inclusion,” she said.
According to the 2018 Financial Inclusion Insights survey, the results of which were published by the National Committee for Financial Inclusion in November 2019, 55.7 percent of the respondents had formal financial accounts with banks, fintech companies or cooperatives in 2018.
That figure marks a jump in financial inclusion from 35.1 percent in 2016 and moves the country closer to President Joko “Jokowi” Widodo’s target of 75 percent of financial inclusion by the end of 2019, the results of which have not yet been published.
Pungky of BI said his institution had actually lowered fixed fee figures to further encourage cashless transactions in the country. He said he expected the QRIS would be used by 15 million merchants by the end of this year from 1.7 million so far in January.
“We are encouraging small and medium businesses in the traditional market as well as campuses and houses of worship to use the standardized QR code,” he said.
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