- Lack of information about e-money in rural areas – a key demographic
- Banks cannot reach people in remote areas, but telcos can
MOBILE money or the mobile wallet is seeing traction in many developing countries, including Indonesia. It allows people to make transactions using their mobile phones, without the need for a bank account.
According to the State of Industry Report: Mobile Money by the GSM Association (GSMA), there were 271 live mobile money services in 93 countries at the end of 2015, compared with 255 live mobile money services in 89 markets around the world in 2014.
In Indonesia, both banks and telcos have become serious players, spurred by central bank and industry regulator Bank Indonesia announcing its National Non-Cash Movement (Gerakan Nasional Non-Tunai/ GNNT) in August 2014.
In information released this March, Bank Indonesia estimated there were 36 million e-money instruments from nine banks and 11 non-bank organisations, which had conducted Rp7.3 trillion (US$551.8 million) worth of transactions last year alone.
Indosat Ooredoo first launched its Dompetku service in 2008, but in August 2015 upped the ante by launching an app with Near-Field Communications (NFC) capability.
In 2015, Dompetku (‘my wallet’ in Bahasa Indonesia) recorded 42 million transactions worth Rp2.5 trillion (US$189 million), compared with 5.3 million transaction worth Rp900 billion (US$68 million) in 2014.
The company is not satisfied with having taken a big chunk of Indonesia’s total mobile money transactions – US$189 million of the total US$551.8 million – and will be pushing the service even more so this year.
According to Indosat Ooredoo president director Alexander Rusli (pic above), one of its strategies to do this would be to promote mobile money for any kind of transaction, especially for those who live rural areas.
“An e-money service is more complex than other services because we can’t treat it as a mass product,” he said.
“Banks cannot reach people in remote areas because of the high cost [of setting up operations there] – we, as a telco operator, can reach those customers,” Alex told Digital News Asia (DNA) on the sidelines of a discussion hosted by the Jakarta Foreign Correspondents Club last week.
But while mobile money can reach those who live in remote areas, there are some major obstacles.
For example, Indosat Ooredoo’s Dompetku service has been available in Sukabumi and Central Java over the past six months. However, the average weekly transaction amount of each user stands at only Rp2,000 – about 15 US cents!
“Today, the ARPU (average revenue per user) is very low indeed,” said Alex, adding that there was a need to educate and encourage users to not only try out the service, but to use it for bigger transactions.
But the company is still heartened by Dompetku’s take-up rate: It had only 11,946 active users in 2014, by the end of 2015, this had increased to 114,713 active users.
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