Market opportunities in mobile money: Indonesia

A large percentage of Indonesia’s population has little or no access to formal financial services mainly due to geographical, infrastructural and cost barriers. However, an even more significant portion of the population has mobile phones, highlighting the potential for digital financial services (DFS). Although mobile banking solutions were introduced a decade ago in Indonesia, it has a long way to go. Currently, the answers serve as an additional channel for those who have bank accounts already-specifically in larger developed urban areas of Jakarta, Bandung, Surabaya, and Denpasar, Bali. This leaves a large percentage of the population (with mobile phones) without access to much needed financial services.

Providers and their offerings

The first mobile money scheme in Indonesia, T-Cash, was first launched in 2007 by Telkomsel, currently the most prominent Mobile Network Operator (MNO) in Indonesia. T-Cash has previously targeted the lifestyle market for discretionary food and beverage merchant payments. They are now diversifying its offering into micro-financial services, transport and other merchant payments. T-Cash is currently accepted at approximately 40,000 retailers In 2008, Indosat launched Dompetku. It’s spin-off PayPro enables QR payments for a range of products and services. The platform also assists with loan applications and investments. GO-JEK, founded in 2010, is one of the original Indonesian unicorn startups is one of the leading DFS providers. They built payments for their motorcycle hailing services which proved to be wildly successful and have now expanded payments into other associated areas like food delivery. OVO, launched in 2016, offers QR code payments across Lippo-owned outlets and shopping malls.


Despite its potential, mobile money faces some challenges. The biggest one is consumer inertia. With cash being so prevalent across the entire payment spectrum many locals are reluctant to change because cash is what they know and trust. To get around this, MNOs and DFS providers should present a compelling proposition, so that consumers can see genuine and tangible benefits like time and cost savings. Often, the resistance is compounded by relatively low levels of financial literacy, so more needs to be done around educating Indonesia’s mass markets on the benefits. This challenge also extends through to a general lack of trust of many corporates and particularly banks and indeed concerns around government intervention and visibility to any non-cash transactions. The traditional banking incumbents have likewise been resistant to change and have used their domineering position in decision-making at a central policy level to slow down or even block regulatory change.

Market Opportunities

Indonesia presents a unique set of opportunities for mobile money, driven mainly by its population size, geographic diversity, a low income per capita and the high penetration and adoption of mobile phone technologies. There is no official figure on the value of the mobile payment transactions in Indonesia. However, global market research company Research and Markets expects transactions to be worth $1.6bn this year and to reach $14.5bn by 2021. With just 35% of the adult population banked and with poor banking infrastructure in rural Indonesia, mobile money can fill this void and bring financial inclusion to the 50 million Indonesian households that are currently excluded. Not only can mobile money open doors to micro-loans and savings accounts, but it can also facilitate essential financial functions such as paying bills and sending money, which are typically made in cash. These cash payments often involve lengthy and costly travel. Creating a cashless society is one of the principal aims of the Indonesian government, to reduce costs and time-wasting associated with over 97% of cash transactions. Mobile money is now being used to assist the government in the electronic disbursement of social welfare and other payments which have historically been made in cash, through one of Indonesia’s 4,000 post offices. This brings significant savings and efficiencies for the government, through a reduction in cash handling costs and a far more robust Know Your Customer process, as well as offering greater convenience for beneficiaries with the funds dispatched directly to their electronic wallet. Collection of funds by central and local government, such as monthly premiums for universal healthcare under its healthcare programme, Jaminan Kesehatan Nasional (JKN), is another example of how mobile money can provide an essential service, particularly when combined with the power of telehealth services.

Choosing the right partner

As the fourth most populous country on earth, Indonesia poses a large and fast-growing market for mobile technologies. The sector has a high potential for growth. In 2014, it was estimated that around 87% of households in Indonesia had a mobile phone. Add this to the percentage of unbanked locals, and the market potential of mobile money becomes very evident. Equipped with the right market advice and tools offered by an expert like Youtap, you can expect to harness this vast potential.

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