B

ank Indonesia (BI) has urged banks operating in the country to improve their infrastructure for non-cash electronic transactions, commonly known as e-finance, to encourage more Indonesians to use banks.

BI’s deputy governor, Ronald Waas, said that the central bank was currently intensifying its campaign to boost non-cash transactions in the economy by encouraging people to use debit, credit or prepaid cards rather than hard cash as their method of payment.

“I encourage banks to develop their facilities for non-cash transactions; for example, by introducing a [prepaid] card that can be used to pay for toll roads and parking fees,” Ronald told reporters on Monday.

“If realized, citizens will find doing transactions easier, and the banks will gain more depositors and more fee-based income from such transactions,” he said, adding that an economy in Indonesia that was less-heavily dependant on cash would in the end improve the banking sector and offer the majority of the population greater access to banking services.

BI data shows that only about half the population has access to financial institutions including banks. In June, credit cards accounted for 16 million transactions in Indonesia, while debit card transactions totaled 17.9 million.

Meanwhile, e-finance transactions conducted with prepaid cards, such as Bank Central Asia’s (BCA) Flazz card, Bank Rakyat Indonesia’s (BRI) Brizzi card, Bank Nasional Indonesia’s (BNI) Rail Card, Bank Mandiri’s E-toll and Indomaret’s cards, amounted to around 8.3 million in June.

These figures are far less compared to the number of similar transactions recorded in other countries. Hong Kong, for example, recorded around 13 million prepaid card transactions per day, said the secretary-general of the Association of Payment Systems in Indonesia (ASPI), Dodit Probojakti.

“It is obvious that we still have ample room for [e-finance] to grow,” he said on Monday.

Dodit added that banks wanting to develop prepaid cards should focus on the two sectors that had the largest growth potential: transportation and retail. “The success of prepaid cards in Hong Kong and Singapore is mainly due to the focus on these two sectors,” he argued.

Analysts believe that a less cash-weighted economy will boost economic efficiency as people will spend less time carrying out transactions. It could also eventually lead to less currency circulating within the economy.

In addition, banks will have a greater opportunity to expand their lending businesses, as people will be inclined to trust their money to banks rather than holding onto large sums of cash.

Indonesia’s telecommunications operators have been expanding their businesses by introducing e-finance services, known as “e-wallet”. Telkomsel, for example, has introduced T-Cash and Tap Izzy, while Indosat has DompetKu. Customers mostly use e-wallets to buy cell phone credit, although the telecommunications operators are in the process of increasing their partnerships with various merchants. (sat)