Eastern Indonesian city books highest nat’l growth in e-money transactions
AT NIGHT is when downtown Makassar, Indonesia beams with lights, some of which project upward, painting the sky with colours. Along the coast of famous local attraction Losari Beach, where the scenic 99 Domes Mosque stands tall, street food vendors thrive as they serve hungry customers.
Nearby, a mall called Phinisi Point – which got its name from the famous phinisi boats docked along the city’s shore – is occupied by modern food and beverage chains from Japanese shaved ice shop Sumoboo to Italian restaurant Portico.
The modern and burgeoning economy in Makassar is largely driven by the services sector and by trade, staying true to its historic roots of being a hub for the spice trade in the pre-colonial and colonial era, and a collecting point for all produce in eastern Indonesia.
The difference now, however, is that a lot of transactions today are done electronically. From street shops to malls, toll roads to taxis, electronic payments in Makassar are gaining momentum, making it the city with the fastest growth in the country this year in electronic money transaction volume, according to Bank Indonesia (BI) data obtained by the Jakarta Post.
The transaction volume for e-money, which ranges from debit cards and credit cards to other forms of e-money such as BCA Flazz and e-wallets Go
Pay and OVO, skyrocketed 204 per cent from January to date in Makassar, higher than 89 per cent in Yogyakarta and 75 per cent in Jakarta, which rank second and third respectively in transaction volume.
At 81-year-old local grocery store Baji Pamai, three electronic data capture machines that handle debit and credit card transactions sit by every cashier stand to serve customers as they check out.
“Alhamdulillah [thanks be to God], this shop that my grandfather inherited can compete with minimarket and supermarket chains that have besieged Makassar,” said owner Ivan Surianto Tranku. “More customers shop with electronic money now, compared with cash. It’s much more practical for them.”
Apart from retail and food and beverage vendors, the aggressive e-money growth in Makassar this year occurred thanks to transactions in transportation and social aid disbursement, according to BI South Sulawesi payments system manager Maudy Halim.
Provincial toll road operators Bosowa Marga Nusantara and Jalan Tol Seksi Empat implemented in November last year the compulsory usage of e-money cards to pay for all toll roads in South Sulawesi.
BI’s headquarters also bolstered last year a programme on transferring government social aid, specifically for the Family Hope Program and noncash food assistance programme, using cashless transactions.
“In South Sulawesi, t he grow th i n electronic transactions is quite significant. In Makassar city there are also several electronic transaction programmes, with e-budgeting and e-parking,” Maudy said as reported by bisnis.com.
Financial inclusion target
The move toward e-money is crucial for Indonesia should it reach its 75 per cent financial inclusion target, as policymakers and industry players increasingly rely on financial technology.
Today only 68 per cent of Indonesians have access to finance, according to Financial Services Authority data.
Following the arrival of ondemand service apps Go-Jek and Grab in 2015, the increased use of their respective e-wallets Go-Pay and OVO has become more prevalent. Stateowned telecommunications operator Telkomsel’s LinkAja is also gaining traction.
“The use of Go-Pay for services outside Go-Jek increased more than 20 times in the past 1.5 years,” said Go-Jek head of corporate communications Winny Triswandhani, adding that the use of Go-Pay went beyond transportation and food payments, extending into other purchases such as bills. Go-Pay can be used for payments with Go-Jek partners, 70 per cent of which are micro, small and medium enterprises.
Research conducted last year by the demographic institution of the University of Indonesia’s Faculty of Economics and Culture showed that Go-Jek contributed 1.7 trillion rupiah ($120 million) to South Sulawesi’s economy.
Endang Kurnia Saputra, head of the advisory group and economic development at BI’s South Sulawesi office, echoed the research results.
He said the increased use of emoney could bolster economic growth by way of accelerating the circulation of money.
“Transactions between traders and farmers are sped up with electronic money because they can be done without having to [physically] go somewhere else,” said Endang Kurnia. “The South Sulawesi people’s adoption of digital technology has been speed up, especially in Makassar.”
Suwarny, 41, is one Makassarese person who has benefited from e-money. The working mother said she used e-money “everywhere” for practically everything.
“With the rise of online businesses, payments with emoney, which do not require that one leaves home or the office, are much easier. I order housing goods online so that the goods can be delivered to my home,” she said.
BI’s South Sulawesi office predicted economic growth in the region to reach between seven and 7.4 per cent, beyond the nation’s overall economic growth target of between five and 5.1 per cent. Economic growth for the city of Makassar has been historically higher than national growth, ranging between 7.4 and 10.3 per cent in the past decade.
BI’s macro-prudential policy department head in Jakarta, Filianingsih Hendarta, noted that despite extreme growth in e-money transactions in Makassar, the capital city remained the champion in terms of overall transaction volume with a 66 per cent market share as of July.
“Infrastructure and usermerchant acceptance through large-scale marketing efforts remain concentrated in Jakarta,” she said.
Indonesian e-wallet players heavily invested in cashback promotion campaigns last year to incentivise users to use their respective products.
E-money transactions have leaped in value over the past three years. Total transactions averaged 71.2 billion rupiah each day until July this year, higher than the daily average 33.9 billion rupiah in 2017, but not as high as the average of 129.3 billion rupiah last year, when e-wallets boosted cashback promotions.
“Electronic money transactions continuously rose, especially in early 2018, following its rapid adoption in digital ecosystems and compulsory usage on toll roads,” Filianingsih told the Jakarta Post.