CASH IN A FLASH - Indonesia

Fintech firms eye e-cash boom

A stall in South Jakarta offering KJP cashless payment.
A stall in South Jakarta offering KJP cashless payment.ST PHOTO: WAHYUDI SOERIAATMADJA

Cashless payments are growing in Asia with consumers lured by an increasing array of services, from smartphone payment apps such as e-wallets to stored value cards and cheap online interbank transfers.Many like the convenience and safety of not having to carry cash. But the growth is not universal, and, in some countries, cash remains king because of fears of identity theft as well as the lack of infrastructure and lack of knowledge of the digital world.

More people in South-east Asia's largest economy are turning to e- wallets, especially with the prevalence of smartphone apps and other e-commerce platforms.

This is natural for a country where a projected 103.5 million people will own a smartphone this year, according to Hamburg-based online statistics firm Statisca.

Retail e-commerce sales in Indonesia totalled US$5.65 billion (S$7.9 billion) last year, up from US$4.61 billion in 2015, said Statisca. It is expected to reach US$10.34 billion in 2019.

This has been a godsend for local fintech firms. Today, Indonesia has about 150 fintech firms, compared to less than 50 three years ago, according to Bank Indonesia.

This has led the central bank to ensure that innovations meet regulatory requirements, such as consumer protection. But this process should not impede the innovation itself, said Mr Junanto Herdiawan, the acting head for fintech at Bank Indonesia.

"To do that, we will do what MAS did, which is to introduce a fintech regulatory sandbox," he said, referring to the Monetary Authority of Singapore.

The sandbox allows for trials by start-ups and large financial companies by limiting the scale and reach of the experiment, he added.

Wahyudi Soeriaatmadja

A version of this article appeared in the print edition of The Sunday Times on March 19, 2017, with the headline 'Fintech firms eye e-cash boom'. Print Edition | Subscribe