The mobile payment scene in Indonesia is burgeoning, with research indicating that it will exceed US$ 15 billion by this year. This trend is largely driven by heavy investments into the space by major players like GoPay and OVO, alongside supportive regulatory initiatives from Bank Indonesia.
South East Asia has long been a proxy battleground between payment giants like Alipay and WeChat Pay, it should come to no surprise to most that these two players have got their eyes set on Indonesia.
In May 2019, BI introduced a nationwide QR code payment standard called the Quick Response Indonesia Standard (QRIS) code in a bid to boost cashless payments by providing a common format for QR code payments.
Since January 1, all digital payments services providers operating in Indonesia have been required to adopt QRIS.
With QRIS in place and adopted, users from one digital payments services will able to transfer funds to any rival service, enabling interconnectivity and interoperability amongst Indonesia providers.
WeChat Pay gets regulatory green light
In January, Bank Indonesia granted WeChat Pay regulatory approval to operate in the country after it formed a partnership with Bank CIMB Niaga, which will serve as an “acquirer” in charge of processing transactions taking place on the platform.
Prior to this license, WeChat Pay was already actively providing services to Chinese travellers to Indonesia.
However, as a foreign digital payments service provider, WeChat Pay is required to partner up with local banks and comply with Indonesia National payment QR code. The central bank together with provincial government had taken action against retailers that facilitated WeChat Pay’s operations in Indonesia,
With the regulator’s blessing, WeChat Pay will now be able to serve Chinese tourists in Indonesia without running into trouble with laws. So far, WeChat Pay is the only foreign payment service in Indonesia that has secured permission to operate in the country.
Alipay seeks a piece of the action, but approval is delayed
Alipay, the digital payments platform of Ant Financial, the financial affiliate of Chinese e-commerce giant Alibaba, has also been looking to tap into Indonesia’s rising digital economy and digital payments sector.
The company plans to begin operation in Indonesia soon though launch is currently being delayed due to paperwork and incomplete documents, Jakarta Globe reported on January 28. Alipay was told by BI to rework its application for a license.
“We’ve asked for corrections in the application and returned it to them,” Sugeng, the deputy governor of BI, told the House of Representatives’ Commission XI overseeing finance and banking in a hearing in January. “Some of the documents were incomplete.”
Alipay has formed partnerships with Bank Mandiri and Bank Rakyat Indonesia.
The Chinese aren’t alone
But WeChat Pay and Alipay aren’t the only foreign players looking for a piece of the pie.
WhatsApp, Facebook’s messaging service, has been in talks with Bank Mandiri as well as multiple Indonesian digital payments firms to offer its mobile transaction services in the country, according to an August 2019 report by Reuters.
The company has reportedly approached ride-hailing giant Go-Jek, which operates the popular Go-Pay payments platform, as well as DANA, a mobile payments firm backed by Ant Financial, and OVO, a fintech startup owned by Indonesian conglomerate Lippo Group. All three are amongst the country’s leading mobile payments platforms.