How e-payment systems promote financial inclusion in Indonesia
FINANCIAL inclusion is a challenge for most developing countries.
Any effort made to increase the accessibility and affordability of financial products and services for both individuals and businesses can help boost financial inclusion for a country.
Indonesia – through various studies and surveys – has learned that cashless transactions or e-payment systems have bolstered its financial inclusion last year.
According to a report, digital wallets are the third most utilized payment system in the country despite setbacks in regulatory procedures.
Presumably, the increased use of smartphones could have contributed to the growth of digital payments.
This is why advancements in digital solutions and fintech are critical driving forces as they can reach the unbanked or underserved community and allow them to participate in the digital economy.
Among e-payment systems that have reached US$600 billion in gross transaction value (GTV) in Southeast Asia include e-wallets, account-to-account transfers, and card-based cashless transactions.
The National Committee for Financial Inclusion’s (DKNI) Head of Project Management Djauhari Sitorus said that “digital technology is the enabler of (wider) financial inclusion”.
“As more and more people use smartphones and digital payment systems, it has the potential to be the game-changer for Indonesia,” Sitorus added.
The DKNI has reported that out of 6,695 respondents from all of Indonesia’s provinces, 55.7 percent have already registered formal financial accounts with either fintech, cooperatives, or banks in 2018.
It was a solid enough record that it boosted the country’s financial inclusion from its 2016 reading, at 35.1 percent to 65 percent in 2019.
However, the figure was a slight miss from Indonesian President Joko Widodo’s target of 75 percent.
Another report by Bank Rakyat Indonesia involving 1,500 respondents revealed that e-payment is the most popular fintech service, recording an 82.7 percent of awareness among Indonesians.
This is followed by digital investment awareness at 62.4 percent and pay-later services at 56.7 percent.
The implementation of the Quick Response Indonesian Standard (QRIS) by Bank Indonesia was also pushed forward in hopes of reaching a high financial inclusion record and boosting cashless payments.
The QRIS centers the integration of readily-available QR-based payment apps to encourage the utilization of online marketplaces among micro, small, and medium enterprises (MSMEs).
The ever-evolving digital marketplace can either be a challenge or a field of opportunities for Indonesia in 2020 and the years to come.
The country needs to continuously strive to deploy fintech solutions and endorse the adoption of digital payment systems in order to further strengthen inclusion and help better the lives of Indonesians.