The Impact of Indonesian Payments on Independent Site Conversions

As one of the largest digital economies in Southeast Asia, Indonesia's unique payment ecosystem is critical to the impact of independent site conversion rates. Below is an analysis of Indonesia's payment characteristics and optimisation strategies in terms of key dimensions:

I. Core influencing factors

1. Insufficient localised payment coverage

• Supporting only international cards (Visa/Mastercard) will lead to loss of potential customers for 78%
• E-wallets like OVO/DANA account for 43% of e-commerce transactions (2023 data)
• Bank transfers accounted for 311 TP3T, of which BCA Bank had a sole market share of 621 TP3T

2. Payment failure rates remain high

• Average 3D Secure authentication failure rate of 28%
• Unstable API connections to e-wallets such as GoPay cause 15% transaction disruptions

II. Portfolio of high-conversion payment programmes

1. Must pick up the channel:

   • LinkAja (SOE background, covering 17 million users)
   • BCA KlikPay (banking preferred)
   • Indomaret offline collection (for the unbanked)

2. Innovative approaches:

   • PayLater instalments can boost customer unit prices 37%
   • QRIS Unified QR Code System Reduces Jump Churn

III. Technical optimisation points

1. Responsiveness:

• Local server deployment reduces payment page load time from 5.2s to 1.8s

2. Failover mechanism:

• The success rate of automatic switching of aggregation gateways such as Doku can reach 99.6%

IV. Compliance Minefield Warning

1. BPJPH Halal Certification Requirements:

IV. Compliance minefield warnings (continued)

1. BPJPH Halal Certification Requirements

   • Indonesia is the largest Muslim market in the world, and categories such as food, beauty and health products need to be certified by BPJPH (Indonesian Halal Product Certification Bureau).
   • Uncertified goods can lead to payment interception and even customs detention.

2. PSE (electronic system operator) registration

   • From 2023, all standalone stations involving Indonesian user data must be filed with the Ministry of Communications or risk payment channel closure.

3. Value Added Tax (VAT) and Cross-Border Tax Compliance

   • Single transactions over $75 are subject to 11% VAT (will increase to 12% in 2024). Some payment gateways will withhold the tax, but failure to do so correctly may result in customs clearance delays or penalties.

V. Consumer Trust Enhancement Strategies

1. Localised Trust Symbol Display::

   • Adding a local payment LOGO such as DOKU/OVO to the checkout page can boost 19% conversions.
   • The "Bayar di Indomaret" (Convenience Store Payment) option reduces the abandonment rate of new users 33%.

2. Instalment Optimisation::

   • Buy-and-pay services such as Akulaku and Kredivo have a penetration rate of 41% among young people, and the provision of 0% interest instalments can increase unit prices by 25%.

3. COD (Cash on Delivery) fine-tuned management::

   • COD order share is still as high as 351 TP3T, but rejection rates may exceed 201 TP3T. solutions:
     ✓ Pre-authorisation to freeze part of the amount (e.g. GoPay's PayLater COD feature).
     ✓ Mandatory OTP verification of number authenticity when placing an order.

VI. Data-driven A/B testing recommendations

1. Payment Sorting Experiment:
   Test a sample of the effects of different channel alignment orders:

Option A: OVO → DANA → BCA Transfer → Credit Card (best local transfer) 

Option B: Credit Card → PayPal → Bank Transfer (common on international sites but poor in Indonesia)

• Data show that programme A has an average of 271 TP3T completion rates higher than B.

2. "Ghost Button trap detection.
   Users in certain areas will click 'Pay Later' by mistake and be lost, the button position can be optimised by heatmap analysis.

VII. Emerging trends and future layout

1.  [Biometric Pay] The Rise of Biometric Payments
  - Gojek has piloted fingerprint/facial recognition payments and expects to cover 30% digital transactions by 2025.

2. [Social e-commerce integration] TikTok Shop + e-wallet linkage
   - TikTok's inline DANA payments have a 40% higher order conversion rate than outbound hops.

List of key actions

Need an in-depth solution for a specific segment? For example, how to reduce 3DS failure rates with Doku Gateway? Or how to optimise the reconciliation process for Indomaret Collections? This can be explored further!