Indonesia Considering Setting Fixed Fees for E-Wallet Transactions

January 2020

Indonesia is mulling setting fixed fees on some e-wallet transactions at 0.7%. This step could have a significant impact on the rapidly growing digital payments sector in Indonesia.

Indonesia is a lucrative market for e-wallet firms with a flourishing multi-billion-dollar digital payments industry and half of 265 million unbanked population. Indonesia has 4 major e-wallet firms in the ecosystem. They are the ride-hailing startup Gojek, startup OVO, Alibaba Ant Financial’s DANA and state-owned payments platform LinkAja.

At the moment e-wallet firms charge variable fees, charging a premium from big retailers and giving discounts or absorbing costs for smaller merchants to attract merchants to the platforms. A fixed fee could potentially deter small merchants from using the e-platforms, while a fixed fee of 0.7% for the larger clients some of whom pay up to 2% would push down revenues for the payment service providers.

In addition, the fee earned on e-wallet transactions would be split three ways under the new system: e-wallet companies, middle-men payment processors and a consortium of major Indonesian lenders (the National Electronic Transaction Settlement). Currently, e-wallet firms either keep the whole fee or split the fee with some payment processors.

(Sources: CNBC; Pymnts)

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