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The Cards and Payments Industry in Indonesia: Emerging trends and opportunities to 2021

The Cards and Payments Industry in Indonesia: Emerging trends and opportunities to 2021

Summary

Cash was the predominant payment instrument during the review period (2012-16), especially among the rural population, with cash accounting for 98.6% of the total volume of payments in 2016. This was primarily due to low awareness of electronic payments, a high unbanked population, and limited access to banking infrastructure. As the government and banks have taken initiatives to bring the unbanked population into the formal banking system, payment cards have gradually become more accepted. Payment card use consequently grew during the review-period at a CAGR of 13.9% in terms of volume of transactions.

Pay-later card market in Indonesia is still in the developmental phase, with penetration of only 6.8 per 100 individuals in 2016. Strict government regulation with regard to credit card eligibility remains one of the major reasons for the low penetration. Mounting card debt among consumers forced the central bank to introduce a regulation, effective since January 2015, according to which individuals with an annual income of less than $222 (IDR3m) are now eligible for just one credit card, while individuals with an annual income between $222 (IDR3m) and $740 (IDR10m) are eligible to possess credit cards from two issuers only.

Indonesian e-commerce market rose from $1.2bn (IDR16.6tn) in 2012 to $7.6bn (IDR102.9tn) in 2016. Factors affecting the growth of ecommerce include a growing young population, the increasing presence of online retailers, a broader range of payment methods, and rising customer confidence in e-commerce transactions. Growth has further been supported by strong investments from the private sector.

Traditional payment methods such as credit transfers and cards remain the preferred mode of e-commerce payments in Indonesia, collectively accounting for 66.9% of the total e-commerce transaction value in 2016. Alternative payments such as digital and mobile wallets and carrier billing are also gradually gaining prominence in Indonesia, accounting for 6.8% of the total transaction value in 2016. This is an increase from 3.1% in 2012.

The report The Cards and Payments Industry in Indonesia: Emerging trends and opportunities to 2021 provides detailed analysis of market trends in the Indonesian cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including cash, cheques, and payment cards during the review-period (2012-16).

In particular, this report provides the following analysis -

  • Current and forecast values for each market in the Indonesian cards and payments industry, including debit, credit and charge cards.
  • Detailed insights into payment instruments including cash, cheques, and payment cards. It also, includes an overview of the country's key alternative payment instruments.
  • E-commerce market analysis and payment methods.
  • Analysis of various market drivers and regulations governing the Indonesian cards and payments industry.
  • Detailed analysis of strategies adopted by banks and other institutions to market debit, credit and charge cards.
Companies mentioned in this report: Bank Rakyat Indonesia, Bank Negara Indonesia, Bank Central Asia, Bank Mandiri, Bank Danamon, CIMB Niaga, Bank Mega, Visa, Mastercard, American Express, JCB.

Scope
  • Bank Indonesia, the country’s central bank, is enhancing the security of payment systems in order to build customer confidence in payment cards. In this regard, the government has mandated the migration of all payment cards to EMV standards by December 31, 2021. Similarly, as of July 1, 2017 the central bank has mandated the adoption of six-digit PINs for debit and ATM cards, instead of four-digit PINs.
  • Up until February 2016, the e-commerce market was in the government’s “Negative Investment” list - and thereby foreign investors were not allowed to invest in local companies or set up a business. To boost investment in the domestic e-commerce market, the government introduced a new foreign direct investment policy in February 2016 allowing 100% foreign ownership of e-commerce companies for investments over $7.4m (IDR100bn), while for investments between $740,000 (IDR10bn) and $7.4m (IDR100bn), foreign ownership was capped at 49%. However, the former regulation was later revised in May 2016 to limit foreign ownership up to 49% in e-commerce companies.
  • Consumers in Indonesia are gradually adopting contactless payments. Consequently, Visa launched its contactless service Visa payWave in Indonesia in September 2016. This service enables Visa card holders to make contactless transactions without a PIN for transactions below $74.0 (IDR1m). Following this, Bank CIMB Niaga, Bank Tabungan Pensiunan Negara, UOB Indonesia, and Bank Mandiri adopted this technology.
Reasons to buy
  • Make strategic business decisions, using top-level historic and forecast market data, related to the Indonesian cards and payments industry and each market within it.
  • Understand the key market trends and growth opportunities in the Indonesian cards and payments industry.
  • Assess the competitive dynamics in the Indonesian cards and payments industry.
  • Gain insights into marketing strategies used for various card types in Indonesia.
  • Gain insights into key regulations governing the Indonesian cards and payments industry.


  • Executive Summary
    • Market overview
    • Key facts
      • Table Indonesia: key facts, 2016
      • Table Indonesia: regional benchmarking of payment cards, 2016
    • Top five industry events
  • Payment Instruments
    • Current payment environment
      • Table figure 1: Indonesia: payment instrument shares by transaction value (%), 2012 vs 2016
      • Table figure 2: Indonesia: payment instrument shares by transaction volume (%), 2012 vs 2016
  • E-Commerce and Alternative Payments
    • E-commerce market analysis
      • Table figure 3: Indonesia: e-commerce market value
    • Alternative payment solutions
      • PayPal
      • Sakuku
      • Mandiri e-Cash
      • Straight2Bank
      • Dompetku
      • XL-Tunai
      • TCASH
      • mVisa
      • DOKU
      • Fortumo
      • BBM Money
  • Regulations in the Cards and Payments Industry
    • Regulatory framework
      • Regulations related to card issuers
      • Regulations related to credit cards
      • Electronic banking regulations
    • Anti-money laundering
    • Foreign direct investment regulations
      • Table Indonesia: mode of entry of foreign banks
  • Analysis of Cards and Payments Industry Drivers
    • Table figure 4: Indonesia: population and economic indicators
    • Table figure 5: Indonesia: ATMs, POS terminals, and household consumption
  • Payment Cards
    • Table figure 6: Indonesia: payment cards transaction value and cards in circulation, 2012-21f
  • Debit Cards
    • Debit cards market analysis
      • Table figure 7: Indonesia: debit card penetration and turnover per card
    • Competition in the debit card market
      • Table figure 8: Indonesia: debit card scheme and issuer transaction value shares, 2016
    • Debit card comparison
      • Table Indonesia: debit card comparison and key features, 2017
  • Pay-later Cards
    • Pay-later card market analysis
      • Table figure 9: Indonesia: pay-later card penetration and turnover per card
    • Competition in the pay-later card market
      • Table figure 10: Indonesia: pay-later card scheme and issuer transaction value shares, 2016
    • Pay-later cards comparison
      • Table Indonesia: gold credit cards comparison and key features, 2017
      • Table Indonesia: premium credit cards comparison and key features, 2017
      • Table Indonesia: charge cards comparison and key features, 2017
  • Prepaid Cards
    • Table figure 11: Indonesia: prepaid cards in circulation, and transaction value, 2012-21f
  • Merchant Acquiring
    • Table figure 12: Indonesia: merchant acquiring transaction volume and value, 2012-20f
    • Table figure 13: Indonesia: acquirers' market share in terms of transaction volume and value (%), 2015
    • Table figure 14: Indonesia: average merchant service charge and interchange fee (%), 2012-20f
  • Appendix
    • Abbreviations and acronyms
    • Supplementary data
      • Table Indonesia: payment instrument transaction values (IDRtn), 2012-16
      • Table Indonesia: payment instrument transaction values ($bn), 2012-16
      • Table Indonesia: payment instrument transaction volumes (millions), 2012-16
      • Table Indonesia: payment cards in circulation by type (millions), 2012-21f
      • Table Indonesia: volume of payment card transactions (millions), 2012-21f
      • Table Indonesia: value of payment card transactions (IDRtn), 2012-21f
      • Table Indonesia: value of payment card transactions ($bn), 2012-21f
      • Table Indonesia: debit cards in circulation (millions), 2012-21f
      • Table Indonesia: debit card transaction volumes, 2012-21f
      • Table Indonesia: debit card transaction values (IDR), 2012-21f
      • Table Indonesia: debit card transaction values ($), 2012-21f
      • Table Indonesia: debit cards in circulation by scheme (millions), 2012-16
      • Table Indonesia: debit card transaction values by scheme (IDRtn), 2012-16
      • Table Indonesia: debit card transaction values by scheme ($bn), 2012-16
      • Table Indonesia: debit card transaction values by issuer (IDRtn), 2012-16
      • Table Indonesia: debit card transaction values by issuer ($bn), 2012-16
      • Table Indonesia: pay-later cards in circulation (millions), 2012-21f
      • Table Indonesia: pay-later card transaction volumes, 2012-21f
      • Table Indonesia: pay-later card transaction values (IDR), 2012-21f
      • Table Indonesia: pay-later card transaction values ($), 2012-21f
      • Table Indonesia: pay-later cards in circulation by scheme (000s), 2012-16
      • Table Indonesia: pay-later card transaction values by scheme (IDRtn), 2012-16
      • Table Indonesia: pay-later card transaction values by scheme ($m), 2012-16
      • Table Indonesia: pay-later card transaction values by issuer (IDRtn), 2012-16
      • Table Indonesia: pay-later card transaction values by issuer ($m), 2012-16
      • Table Indonesia: credit cards in circulation (millions), 2012-21f
      • Table Indonesia: credit card transaction volumes, 2012-21f
      • Table Indonesia: credit card transaction values (IDR), 2012-21f
      • Table Indonesia: credit card transaction values ($), 2012-21f
      • Table Indonesia: credit cards in circulation by scheme (000s), 2012-16
      • Table Indonesia: credit card transaction values by scheme (IDRtn), 2012-16
      • Table Indonesia: credit card transaction values by scheme ($m), 2012-16
      • Table Indonesia: charge cards in circulation (000s), 2012-21f
      • Table Indonesia: charge card transaction volumes, 2012-21f
      • Table Indonesia: charge card transaction values (IDR), 2012-21f
      • Table Indonesia: charge card transaction values ($), 2012-21f
      • Table Indonesia: charge cards in circulation by scheme (000s), 2012-16
      • Table Indonesia: charge card transaction values by scheme (IDRtn), 2012-16
      • Table Indonesia: charge card transaction values by scheme ($m), 2012-16
      • Table Indonesia: prepaid cards in circulation (millions), 2012-21f
      • Table Indonesia: prepaid card transaction values (IDRtn), 2012-21f
      • Table Indonesia: prepaid card transaction values ($m), 2012-21f
      • Table Indonesia: merchant acquiring transaction volumes (millions), 2012-20f
      • Table Indonesia: merchant acquiring transaction values (IDRtn), 2012-20f
      • Table Indonesia: merchant acquiring transaction values ($bn), 2012-20f
      • Table Indonesia: acquirers' transaction volumes (millions), 2011-15
      • Table Indonesia: acquirers' transaction value (IDRtn), 2011-15
      • Table Indonesia: acquirers' transaction values ($bn), 2011-15
      • Table Indonesia: retail outlets and card-accepting merchants (000s), 2012-20f
      • Table Indonesia: debit card average interchange fees (%), 2011-15
      • Table Indonesia: debit card merchant service charge and interchange fee (%), 2012-20f
      • Table Indonesia: pay-later card average interchange fees (%), 2011-15
      • Table Indonesia: pay-later card merchant service charge and interchange fee (%), 2012-20f
    • Definitions
      • Table Key definitions
    • Methodology
    • Bibliography
    • Further reading

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