Even though Indonesia is very much a cash-based economy, it has a rapidly growing E-Cash segment. A KPMG paper from 2017 reports double-digit growth in cashless transactions. A large part of this is driven by e-commerce and online ride-sharing companies. In recent years, these have developed their own cashless payment systems. Consequently, they are competing fiercely for customers. We examine the most popular platforms and the role they could play in your financial life.
What is E-Cash?
In 2018, Bank Indonesia finally released a regulation governing electronic money or E-Cash. With this framework, companies can now operate their own E-Cash payment system. Primarily, they function as an online wallet on your smartphone. You can deposit money into these wallets, which then can be used at various merchants.
E-Cash usage is rapidly expanding in Indonesia. As a result, a growing network of merchants now accept E-cash payments. The cost of accepting these transactions are lower than traditional credit or debit cards. As a result, even smaller traditional merchants (even street vendors!) have chosen to accept them.
How to begin using E-Cash in Indonesia?
In general, there are 3 easy steps to using E-Cash in Indonesia:
- First of all you need to download the app from your app store. You may already have one or more of these apps on your phone. Your phone number is usually also your account number.
- Then you load an amount of money, either via bank transfer, ATM transfer or in person at a merchant (or Grab/GoJek driver, as the case may be)
- Finally, to spend the money, you tell the merchant your phone number. Alternatively, at some merchants you can scan a QR code the merchant provides.
More in-depth with E-Cash in Indonesia
All E-Cash platforms are governed by the same Bank Indonesia rule. Therefore there are some common features:
- There are two tiers of accounts: non-verified and verified. The non-verified accounts only have your phone number attached to them. The verified account require the uploading of a photo ID, along with a selfie picture of yourself. Note that a foreign passport and KITAS/KITAP are perfectly acceptable.
- Non-verified accounts. You can load up to Rp 2 million at a time, into a non-verified account. You can then use the money to shop online, pay bills and use your phone to make payment at brick and mortar merchants.
- Verified accounts. You can load up to Rp 10 million at a time into a verified account. Similar to non-verified accounts, you can use your online wallet to shop and pay bills. Additionally, you can also transfer money between users as well as withdraw cash from your online wallet.
Why use E-Cash In Indonesia?
Cash Back and Promotions
As these companies are fiercely competing for customers, they offer generous promotions. Flush with venture capitalist money, offers of cashback up to 50% are common (but check the fine print for limitations!). As are other gimmick promotions, such as buy one get one free, and free or nearly free products.
A recent article estimates that one such company burns through US$ 1 million per day (!) to subsidize these promotions. Naturally, this can not last forever. However, while they do, why not take advantage?
Cashless alternative to credit/debit cards
If you do not have an Indonesian bank account, you can use E-Cash apps as a cashless payment alternative. It is certainly more convenient and safer than carrying cash everywhere.
Online bill payment
You can use any of these apps to easily pay most bills in Indonesia. These include electricity (both prepaid and postpaid), water, internet, phone and other utility bills. You can even pay national health insurance (BPJS Kesehatan) dues.
Budgeting or allowance tool
You can deposit a set amount every month and easily control how much you spend. Also good for setting allowances for children.
The most popular E-Cash apps
There are now over 30 E-Cash apps registered with Bank Indonesia. That number is growing. The top 4 apps by active users according to Google Play Store and iOS store are OVO, GoPay, DANA and LinkAja.
OVO is probably the most convenient one, allowing users to pay at major online retailer Tokopedia. Additionally, ride hailing and food delivery app Grab, department store chain Matahari, and hundreds of smaller stores all accept OVO.
Read our article on Online Shopping in Indonesia
Close behind OVO is GoPay, the payment solution offered by Indonesian transportation and life app GoJek. In addition to paying for your GoJek rides and deliveries, you can use GoPay at McDonald’s, Starbucks, and Gramedia bookstores, among others.
DANA is one of the most recent additions to the E-Cash in Indonesia scene. Ant Financial (AliPay) is behind this platform, and it has quickly grown into the top 3 e-cash apps. It is particularly strong for restaurants and food vendors, and partners include KFC, Domino’s Pizza, Wendy’s and many more.
LinkAja is the solution offered by Indonesia’s state owned enterprises. It combines the digital wallets or several different state companies into one platform. Telkomsel, Pertamina, and 5 different state banks support this platform.
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Author’s Note: Neither the author nor Expat Indo were compensated by any of the companies listed here. First and foremost, we wanted to give an impartial overview for the benefit of our community. For this reason we also did not directly link or affiliate link to any of the sites mentioned here.