E-wallets require novel use cases as QRIS muscles in: Analysts

While consumers welcome the central bank’s initiative for doing away with a confusing array of payment options, it raises questions about the business models of e-wallets initially built around provider-specific apps and QR codes.

Aditya Hadi

Aditya Hadi

The Jakarta Post


A merchant displays a QRIS code for a wide range of cashless payments on April 20, 2022, in Jakarta. PHOTO: SHUTTERSTOCK/ THE JAKARTA POST

October 9, 2023

JAKARTA – Bank Indonesia’s (BI) Quick Response Indonesia Standard (QRIS) has gained significant traction since its launch in 2019 as people continue to switch from cash to mobile payments, altering the competition landscape and forcing e-wallets to reassess their role in the industry.

While many consumers welcome the central bank’s initiative for doing away with a confusing array of payment options, it raises questions about the business models of e-wallets like GoPay and OVO initially built around provider-specific apps and QR codes.

The central bank standard gives commercial banks easier access to the mobile payment market, in which e-wallet firms had carved out exclusive market shares for themselves before QRIS levelled the playing field with its open-for-all standard.

Analysts contacted by The Jakarta Post said the rivalry between e-wallet players and banking apps was not a zero-sum game, as there is a specific market for both. However, they suggested the former build additional use cases on top of pure payment capabilities to stay relevant.

BI data shows that total transaction value of electronic money, which includes e-wallet players like GoPay and OVO, reached Rp 189 trillion (US$12.1 billion) between April and August of this year, which is up 12.6 percent from the same period last year.

The pace of growth is similar to that of digital banking apps, which grew around 12.5 percent year-on-year, despite having a far higher transaction value of almost Rp 24 quadrillion.

Meanwhile, the use of QRIS doubled during the same period, reaching Rp 86 trillion in total transaction value. By the end of August, the QR standard had been used by 40 million people and 28.4 million merchants, most of them micro, small and medium enterprises (MSMEs).

Jianggan Li, CEO of Singapore-based venture outfit Momentum Works, said QRIS not only provided a standard but also lowered the barrier digital payment adoption. While facilitating interoperability, it also redefines the cost structure of making a payment, impacting the revenue models of all payment providers, he explained.

Analysts see the emergence of QRIS benefitting digital banking apps more than e-wallet players and note that the latter require an additional top-up step.

However, Jianggan opined that the reality was more nuanced than that.

“Of course, topping up an e-wallet account is an additional hassle and friction point for payment adoption. However, there are many ways to make this hassle worthwhile for users, such as lower transfer fees, more embedded payment use cases and a direct debit option that some e-wallets have with certain banks,” Jianggan told the Post on Thursday.

Read also: RI, Singapore debut linked cross-border QR payment system

Roshan Raj Behera, the Southeast Asia partner of management consulting company Redseer, forecasted that QRIS’ share of transactions would increase further, with traditional banks likely to push for wider adoption as they feel the standard benefits them.

Roshan also argued that the usage of QRIS in retail payments could partly offset demand for e-wallets.

“E-wallets like GoPay, OVO [and] Dana are the default payment options for many transactions and well-integrated with their core product or service offerings,” Roshan told the Post on Wednesday.

Nailul Huda, digital economy director at the Center of Economic and Law Studies (CELIOS), also believes that QRIS encourages some people to switch from e-wallets to digital banking apps. Nevertheless, he pointed out that e-wallet players still had some advantages over established banks, such as a simpler registration process for people who do not have a bank account.

“If those people want to top up, they could go to a minimarket or [other] retail outlet that provides such a service,” Nailul told the Post on Thursday, adding that e-wallet players should add top-up access to provide convenience for users.

E-wallet players need more use cases

In August, BI announced a new standard for QRIS that allows users to conduct money transfers as well as cash deposits and withdrawals. People could start to use the new feature, called QRIS Tuntas, as early as last month, depending on the readiness of each payment service provider.

According to the central bank, for transfers of less than Rp 100,000 to another bank or provider, a user only needs to pay a transaction fee Rp 2,000, which is far less than the traditional interbank transfer fee of Rp 6,500.

Read also: QRIS as the future of financial transactions

Flip, a local start-up whose main business is money transfers, rejected the idea that the rise of QRIS could hamper its growth. According to the firm, the introduction of QRIS, in fact, allows for the creation of new products, such as payment features.

“The way we see it, [the trend] could benefit all the players involved. In the end, the whole financial technology [space] would become an ecosystem [in which service providers] support each other,” Flip chief operating officer Gita Prihanto explained to the Post on Sept. 12.

The firm pledged to provide more features and products to help retain users.

Redseer’s Roshan agreed that payment firms, as well as e-wallet players, had to continue expanding beyond the “vanilla” payments to sustain growth. Those firms needed to find new use cases and user profiles where digital payment penetration was still low, he said.

Meanwhile, Jianggan from Momentum Works said e-wallet players that operated efficiently and built and maintained a sound ecosystem of use cases would stay competitive even against the major banks. They could do it by placing other financial services on top of existing core payment solutions.

“I think the future will depend on the strategies and how individual players execute said strategies. It’s hard to generalize,” he concluded.

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