Mobile Payments and Remittances in Indonesia

Mobile Payments and Remittances in Indonesia

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This report provides an overview of the mobile payments market in Indonesia.  It includes information such as the factors driving a high percentage of prepaid cellular phones, the available mobile money wallets and usage fees.  The report also includes information on the regulatory scheme that governs the mobile money and remittances market.  Key player profiles are presented for Telkomsel, Indosat, Bank Central Asia, Bank Mandiri, and Pos Indonesia including products, markets served, business proposition, and revenue model for each. 

The report notes that mobile phones are everywhere in Indonesia, prompting providers to move into the mobile money space in the past five years. However, the high frequency of fraud in Indonesia has necessitated complex banking protocols, resulting in electronic balkanization: no single network links all ATMs; supermarket checkout counters typically have half-a-dozen swipe machines because each credit card issuer requires its own; and funds on one telco's mobile wallet are not transferrable to a different telco's m-wallet. In addition, Indonesian m-wallets cannot receive foreign remittances directly. As a result, there is a huge third-party market of money transfer operators that facilitate incoming remittances from millions of Indonesians who work overseas. Some of these operators are prominent commercial banks, while others are back-room companies that thrive on links to overseas operators. Indonesians repatriate USD 5-10 billion each year, typically in amounts of USD 100-200 with sender fees in the USD 2-6 range. Of the eight "remittance corridors" that are likely to inject over USD 100 million each into the Indonesian economy in 2011, the US-Indonesia corridor ranks last. However, this corridor is the only large one showing steady month-on-month growth this year, resulting in a cumulative 53% gain from January to June.   


Author Information

Martin Schell has been living in Indonesia since 1992. For several years, he worked as a marketing consultant in a high-end furniture factory.  Later, he developed and taught writing workshops for the Ford Foundation and World Bank in Jakarta. At present, he teaches online for Stern School of Business as an adjunct in Management Communications. He also performs cost-of-living surveys for The Economist Intelligence Unit and works as a freelance editor and business consultant.

Length: 9 pages

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