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Too big to ban? PayPal's crucial role as a payment gateway in Indonesia
Disruption caused by the government’s recent blocking of PayPal highlights the significance of international payment gateways for Indonesian businesses and consumers amid limited options for cross-border transfers.
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PayPal says its recent purchase of iZettle will expand its reach into shops in Brazil, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Spain and Sweden. (Shutterstock/File)
T
he recent short-lived blockage of PayPal for failing to register promptly with the government under new rules on electronic service providers (ESPs) caused a stir among users and revealed the importance of international payment gateways for Indonesian businesses and consumers.
While bank transfers and money-transfer services are always available, those are often deemed too cumbersome and/or too costly, especially for frequent or small transactions.
In spite of the mantra that digital tech firms cannot afford to ignore the country’s large market potential, experts told The Jakarta Post that, at present, Indonesia needs PayPal more than PayPal needs Indonesia.
Trissia Wijaya, head of economic opportunities research from the Center for Indonesian Policy Studies (CIPS), said at least 5 million freelancers in Indonesia sourced their income from overseas, and most of them used PayPal to get paid.
“[Indonesian] freelancers’ dependency on PayPal is not comparable with PayPal’s dependency on the Indonesian market. According to Statista […], Indonesia is not even in the top-15 in terms of users,” Trissia said about Indonesia’s market for PayPal, before deducing that that may explain PayPal’s slow response to the changes in ESP regulations.
Read also: Govt blocks Yahoo, Steam, PayPal for failing to comply with licensing policy
Tesar Sandikapura, chairman of the Indonesian Digital Empowering Community (IDIEC), said PayPal was the most established player in the cross-border transaction ecosystem, and its massive head start gave it an unparalleled advantage.
