What is Indonesia Payments? Beginner's Guide

introductory

With the rapid development of the digital economy, the electronic payments market in Indonesia ("Indonesia") is growing rapidly. For merchants or individuals who are new to the Indonesian market, it is important to understand the local payment methods. In this article, we will introduce the mainstream payment methods, usage scenarios and how to choose the right payment solution to help you quickly adapt to the financial ecosystem in Indonesia.

1. Overview of the Indonesian payments market

1.1 Market size and development trends

Indonesia is one of the largest economies in Southeast Asia, with a population of more than 270 million people, including more than 70% internet users. ePayment penetration continues to rise as smartphone penetration increases and the government supports the digital economy. According to Statista data, digital payment transactions in Indonesia are expected to exceed $50bn in 2023.

1.2 Key drivers

• government policy: e.g. the promotion of QRIS (Quick Response Code Indonesian Standard) standardised QR code payments.
• Financial technology development: Local and international companies have been laying out mobile wallets, bank transfers and more.
• Changes in consumer habits: The younger generation prefers a cashless mode of transaction.

2. Introduction to mainstream Indonesian payment methods

2.1 OVO (mobile wallet)

OVO is part of the Gojek ecosystem and is widely used for online shopping, transport and offline retail shop payments. Advantages include:

• high coverage: Work with a wide range of merchants;
• Promotions galore: Discounts and cashbacks are often offered;
• Supports multiple top-up methods: Bank transfers, convenience store cash top-ups, etc.

2 . LinkAja (State-backed wallet)

Jointly launched by a number of state-owned enterprises, it is suitable for payment of government services, public transport and other areas. The features are as follows:

• Deposits can be made by card or via ATM ;
• Discounts for use in state-run institutions;

DANA (Emerging Competitor)

Focusing on PPP (Person-to-Person) transfers and micro and small business collection needs, it has grown rapidly in recent years.

Table:Comparison of the three major local e-wallets

3 . Bank-related options

Despite the growing popularity of non-cash means, traditional banking remains important.

BCA Virtual Account

Allow customers to generate their own VA number for secure transfer of large amounts in one easy step.

①Select "BCA VA" to check out → ②Get the unique number → ③Pay with Internet Banking.

Mandiri Clickpay (Online Internet Banking Interface)

Pre-registration is required for those who already have a MANDIRI account.

4 Cross-border solutions

If the target users include overseas groups the following tools may be more appropriate.

• PayPal (Restricted in some areas)
• Xendit (supports international card acceptance)

5 How do I access these channels?

It is advisable to contact specialised aggregation platforms such as.

・DOKU
・Midtrans

They can integrate multiple localised collection and payment modules at once lowering the technical barrier!

6 Frequently Asked Questions (F A Q s )

Q :Do I have to apply for a local licence to operate?
A : Depending on the specific business, it is generally necessary to register a PT company and obtain a BP JI licence.

Q :Which method has the lowest commission?
A :Usually the cost of direct bank connection is smaller but the development cycle is longer; the third party service provider charges a little higher but saves the time cost.

7 Future outlook analysis

Biometric Payment is in the trial stage and is expected to be the next wave while the central bank's digital currency programme is also entering a testing period worth keeping an eye on!

8 Summary and recommendations for action

For those who are new to the market we recommend a three-step process.

STEP [I] Research your own customer base preferences
STEP [II] Assessment of compliance requirements
STEP [III] Selection of reliable technology partners

By systematically implementing the above strategies you can effectively enhance your business success in Indonesia Asia Pacific!

In-depth analysis of the Indonesian payments market (continued)

4. Cross-border payment solutions

Due to Indonesia's stricter financial regulations, international merchants may face challenges in accessing local payment methods. Below are a few options that are suitable for cross-border transactions:

4.1 PayPal (some areas restricted)

• Applicable Scenarios: cross-border e-commerce, international servicesSubscription
• cutting edge: Highly recognised globally and supports multi-currency settlements
• constraint: Some Indonesian users are unable to bind local bank cards and have high cash withdrawal fees

4.2 Xendit (support for international card acceptance)

• Indonesia's homegrown aggregated payment platform that processes international credit/debit card transactions such as Visa and Mastercard.
• Offers virtual accounts, e-wallet integration and instalment capabilities.

4.3 Wise (formerly TransferWise) & Remitly (remittance-type tools)

Suitable for cross-border transfers from individuals or businesses to Indonesia, with favourable exchange rates and fast arrival times.

5. How do I access the main payment channels in Indonesia?

For businesses or individuals looking to enter the Indonesian market, choosing the right payment integration method is crucial:

(1) Directly interface with bank/e-wallet APIs

• ✅ Advantage: lower costs and reduced middleman extraction
• ❌ Cons:
  • BCA/Mandiri and other banks require local company qualification
  • Complexity of interfacing technologies such as OVO/DANA

(2) Use of third-party aggregation gateways
The following proven service providers are recommended:

• DOKU - The GoTo Group's brands cover a wide range of models including QRIS+OVO+Credit Cards.
• Midtrans - Tokopedia eco-partners are particularly suitable for e-commerce sites.

(6) Frequently Asked Questions (FAQ)

❓ Q1:Do I have to register a PT company to apply for collection?
→ A: Depends on the type of business! Not required if only acquiring through PayPal or Stripe; but to access BCA VA or OVO usually requires a local entity.

❓ Q2:Which method has the lowest rejection rate?
→ A: Bank transfers/virtual accounts have little risk of rejection; credit cards and some Buy Now Pay Later (BNPL) products are more controversial.

❓ Q3:How do you handle a cash-based customer base?
→ Convenience shop collection such as AlfaMart/Indomaret remains an important solution!

(7) Projections of future trends

Focus on three main directions until 2025.
🔹 Biometric Payments (e.g. fingerprint/facial authentication has been piloted at BRI)
🔹 Central Bank Digital Currency (CBDC) - BI has launched a digital rupee testing programme
🔹 Embedded Finance (EF) - Grab partners with SeaBank to launch "Super In-App Lending"

(8). Summary of practical recommendations

Tiering strategies based on target segments.

📌 young netizens → Main Launch of DANA + ShopeePay in conjunction with Social Marketing Campaigns
📌 traditional consumer → Retain Alfamart cash top-up + bank ATM transfer option
📌 overseas buyer →Enable Xendit International Card + Visa Direct Fast Posting

It is also important to monitor the latest BI regulatory changes to avoid compliance risks!