The popularity of e-money and e-wallets continued to increase dramatically among the population of Indonesia towards the end of the review period. In turn, the huge numbers of people becoming interested in digital payment apps spurred strong growth in digital commerce.
The strong growth recorded in digital commerce towards the end of the review period was driven primarily by the fact that Indonesia’s population is becoming more connected. The strong increases being seen in access to the internet among the country’s population are the result of infrastructure development and the falling cost of internet connections, including both fixed line and mobile connections.
Another driver of growth in digital commerce in recent years has been the rise of the pay later option, essentially a form of consumer credit. Many Indonesians favour paying for their purchases in instalments and this is generally either because they prefer to clear their dues at the end of each month or because they are attempting to manage their tight cashflow.
Towards the end of the review period, Lippo Group sold off a significant part of its shareholding in leading digital payment player OVO. Lippo Group was originally the 100% shareholder in OVO.
During 2019, rumours emerged that online transportation company Grab Holding was in the process of acquiring emerging digital wallet service DANA. However, the acquisition process was brought to a grinding halt due to difficulties obtaining regulatory approval from the Indonesian competition authorities.
In response to the general enthusiasm for consumer credit among Indonesian consumers, the leading players in digital wallets have sought to offer a wide range of pay later options. With many Indonesian people preferring to pay in instalments, and with credit card penetration still relatively low, it makes sense for emerging fintech players to develop their own pay later schemes.
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