Digital payment is becoming increasingly popular in Indonesia — yet 99 percent of transactions by volume are carried out using cash, according to management consultancy McKinsey and Company.
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To tap the massive potential of Indonesia’s electronic payment market, Go-Pay — the mobile wallet of ride-hailing app Go-Jek — is planning to « strengthen and deepen » its position in that space, according to Go-Pay CEO Aldi Haryopratomo.
« The real competition is how do we move people away from cash? Once you have people moving away from cash, there is so many things that you can do, » Haryopratomo told CNBC’s « Squawk Box Asia » on Wednesday.
According to Haryopratomo, Go-Pay is currently the country’s market leader in the e-wallet space, where online credits can be used for in-app purchases of goods and services or with partner merchants.
Fintech — or financial technology, which can be broadly defined as digital innovation in financial services — has been gaining traction in Indonesia, Southeast Asia’s largest economy.
The country’s e-wallet market is set to be the fastest-growing fintech segment in the country, according to India-based management consultancy Redseer. A recent Redseer report said the sector is projected to grow from $1.5 billion in 2018 to $25 billion in 2023.
As the mobile wallet market grows in profitability, however, competition is also heating up.
Go-Pay’s largest rival, Ovo, is backed by Singapore-based tech company Grab and is one of the largest players in Indonesia’s digital payment market. State-owned enterprises have also recently collaborated to launch the mobile payment service, LinkAja.
Haryopratomo said he was « excited » by the rising competition.
« I believe the more players in the market, the more partners we can have, actually, that’s the way we think about it, » he added.
To strengthen its position in the market and better serve its consumers, Go-Pay said it is open to partnerships with banks.
« When you’re a player that grows from a very small ride-hailing company to something to become the number one of payments for Indonesia, obviously a lot of banks are going to pay attention, » Haryopratomo said.
« The way that we partner with them is, we find areas where we believe we become a bridge for the bank, » he added. Advertising for banks and connecting them to the large number of Indonesians who do not own a bank account will expand profitability for both parties, Haryopratomo said.
Expansion in Southeast Asiais another priority, according to Haryopratomo.
Go-Jek faced a roadblock in its regional expansion in January when regulators in the Philippines rejected its application to launch a similar ride-hailing service in Manila. The Philippines added ride-hailing to a list of industries in which foreign ownership is capped at 40 percent — a criteria Go-Jek failed to meet.
Undeterred, Go-Jek acquired Philippines-based fintech company Coins.ph for a reported $72 million in January — a move it believes will help expand the country’s financial inclusion.
« We believe that our knowledge of going deep in one market and really providing multiple services can extend to other markets and bring market leadership of that country to us — but also really help the citizens of that country, » Haryopratomo said.