Bank transfers made up 30.7% of the local payments market in 2020.
Cash continues to reign supreme in Indonesia’s payments space, whilst bank transfers remain the most popular payment tool in Indonesia, reports data and analytics company GlobalData. However, alternative payments are on the rise in the country, and will chip away at cash’s dominance as online shopping booms locally.
Bank transfers reportedly made up almost three in 10 payments or 30.7% of the local payments market in 2020, according to GlobalData’s 2020 banking and payments survey. Cash still makes up almost all payment transactions in the market, at 98%.
However, the pandemic has pushed customers to seek alternative payment tools such as OVO, GoPay, PayPal, Dana, DOKU, and LinkAja. As a result, cash share is projected to decline marginally to 96.9% in 2024.
“As Indonesia continues its digital transformation, the use of electronic payments, including cards and alternative payment solutions for e-commerce purchases, will rise as consumers are moving away from cash due to fear of getting infected,” noted Kartik Challa, banking and payments senior analyst at GlobalData.
The boom of e-commerce market in Indonesia will also help in this shift. Rising internet penetration, increasing digitalization and the proliferation of websites have been driving e-commerce growth in Indonesia, and the COVID-19 pandemic has further accelerated e-commerce sales in the country, notes GlobalData.
GlobalData’s E-Commerce Analytics reveals that e-commerce sales is estimated to grow by 37.4% to reach$25.3b (IDR351.1t) in 2020, compared to the pre-COVID-19 estimate of 22.2% for the same year. The figure is further expected to rise at a compound annual growth rate of 19.2% between 2020 and 2024, to reach $51b (IDR707.6 t) in 2024.
“Online shopping is gradually becoming mainstream in Indonesia with more consumers preferring due to the convenience it offers. This shift became even more prevalent during the COVID-19 pandemic with strict lockdown and social distancing rules being in place,” said Challa.
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