Discussion: What’s Wrong With E-payment in Indonesia?

Andrew Darwis, Donald Wihardja, David Ratner, Tedy Djajawinata, Ryu Kawano, Moderator Andi S. Boediman

For the first panel discussion on our Startup Asia Jakarta day 2 conference, we’ve assembled an all-star team to speak on the oft-spoken problem here in Indonesia: What’s wrong with e-payment in Indonesia? The panel was moderated by Andi S. Boediman, director at Ideosource, along with the panelists listed below:

• Tedy Djajawinata, Co-Founder & CEO of VAIA
• David Ratner, Founder at UNIK
• Donald Wihardja, Chief Technology Officer at PT Indomog
• Andrew Darwis, Founder and CTO at Kaskus
• Ryu Kawano Suliawan, CEO and co-founder of PT. Midtrans

#10:30: Andi takes to the stage, introduces the panel.

#10:31: Ryu: E-commerce space here is very interesting. In 2011, 50 million internet users, mostly mobile internet users. By 2015, we foresee an increase in number of internet users to 150 million users, mostly making up of middle-class citizens. Payment market is very fragmented. As a e-commerce guy, one should choose which is most popular and easiest to accept payment.

#10:35: Donald: Indomog has been operating since 2008. starting from digital payment to e-commerce solution. Less than five million people have credit cards. The point here is to capitalize the 150 million middle-class people who is going to transact.

#10:40: David: Initial approach to solve payment issue in Indonesia. There was an initial success in Kenya, and we wanted to see how we could address the payment issues here in Indonesia. Most people have only feature phones, and one of the things we do is how we could tap on this pool of audience.

#10:45: (Difference between payment gateway and e-wallet) Ryu: E.g. when you go to Singapore, you need Singapore dollars to transact, and you have the dollars in our wallet before heading over to Singapore, that is how e-wallet works. Payment gateways are payment processors to have the ability to accept payments. It is a platform where you can accept credit cards and you only need one connection to this platform.

#10:46: Andrew: We created Kaspay in 2009. There is a lot of regulations from government and Indonesian banks. We don’t have expertise in security, and learnt things step-by-step. We want to educate people what is kaspay and e-payment, and do not take a lot of margins. Our main focus now is to educate the market.

#10:50: Tedy: Indonesia is a very different business environment, and there are only about 35,000 ATM machines in Indonesia. What works in Kenya might not work in Indonesia. What we are doing is, we’re not a gateway company. We are aggregating a community of FMIs, channels on mobile phones.

#10:53: Tedy: You need to create a huge volume to monetize. One example is to encourage startup communities to build more e-commerce companies, perhaps to venture into agricultural sectors, such as fertilizers. We are open to working with payment gateways, and look into working with the grassroots level.

#10:55: (Why should users adopt your solutions) Tedy: We think we should work together with telco companies should. It works in Kenya because there are only one or two telcos there. People won’t change telcos just to use your payment platform.

David: Value that we give as an e-wallet provider is that we are easy to use and low fee. We allow business to promote their services. We provide an all-in-one platform. Once they have funds, they can transact almost anything online, which makes it very flexible and convenient to use. We’re working to make it easier to top-up our e-wallet. Today the reality is, you got to accept bank transfers. Working with leading e-wallets are good too, such as Indomog and Kaspay.

Donald: People in Indonesia are afraid of fraud. Hence most are adopting bank transfer and cash-on-delivery to be on the safe side. But there are limitations to these, and disallows startups to scale. Indomog is special because we target middle to lower-income groups, and they can be found throughout Indonesia. Most of our users are gamers, and are comfortable with buying things online. Our companies are hoping that the e-commerce can grow because there is a lot of potential. The users we have are growing; ranging from people buying virtual to physical goods.