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Indonesian banks focusing on online shopping

8 March 2012
Business Week Indonesia

Indonesian banks focusing on online shopping

Rising numbers of internet users and merchants in Indonesia has led to the flourishing of e-commerce payment facilities from banks. Jeffrey Bahar, Deputy CEO of Spire Research and Consulting, was invited by Business Week Indonesia to share his observations about this emerging trend.

For the past few years, Indonesia was left behind in terms of the penetration of real-time integrated payment through internet banking. However, while Singapore and Malaysia are now leading in terms of the maturity and volume of e-payment systems, Indonesia holds more potential for this industry, Bahar remarked.

Statistics show a healthy demand for e-commerce in Indonesia. E-commerce revenues in Indonesia are estimated to reach $1.8 billion in 2015. Bank Central Asia (BCA) of Indonesia registered Rp1.4 trillion (over US$ 150 million) in online credit card sales in 2011.

Bahar pointed out that BCA and Bank Mandiri play a leading role as payment service providers and hence have begun to develop real-time and seamless payment systems for e-commerce.

Bank Central Asia (BCA) released BCA KlikPay, an online payment service used by owners of the KlikBCA and BCA card facilities. It is claimed to be more practical and safe. BCA hopes to utilize BCA KlikPay to maximize credit card usage. Customers can buy products online through BCA KlikPayin with three steps: registration, activation, and transaction. However, BCA was preceded by Bank Mandiri. Long before BCA offered BCA KlikPay, Bank Mandiri launched a more concrete service in the form of a shopping portal named Tokone.com.

Suwignyo Budiman, Director of BCA, said, “Interactions on the internet have been on the rise, thus the online shopping industry will also continue to grow. A credible and practical online paying system is needed for this.” He also shared that several factors have driven them to begin serious work on the e-commerce business:

The internet user base in Indonesia has already reached 50 million.
Shopping preferences are shifting from conventional transactions to online transactions.
The number of online merchants is rising.
The reach of social network communities such as Facebook, Twitter and Kaskus is on the rise.

 To effectively leverage the rising demand for online payment services, Bahar commented that a secured system is vital. Presently, the growth of e-commerce has been hampered by consumers’ insecurities over online payment methods. The assurance of proper security is necessary to promote e-payment transactions.

E-commerce business revenues in Indonesia are predicted to reach US $1.8 billion by 2015. This huge market is supported by three sectors: e-commerce merchants and customers, ecosystem enablers and digital content providers.

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