E-MONEY PENETRATION IN INDONESIA: THE CHALLENGE OF CONSUMER BEHAVIOR AND MISCONCEPTIONS
As Indonesian central bank, Bank Indonesia launched a campaign to create a cashless society. E-money is a sort of solution for the ‘un-bankable’ society of Indonesia, and for those who often conduct banking transactions, e-money can play a role as complementary of other non-cash media such as credit cards, debit cards, checks, etc.
This campaign was based on the fact that Indonesian people do more often conduct non-cash transactions compared to people in other ASEAN countries, which accounts for more than 50%. Therefore, Bank Indonesia needs to encourage the use of non-cash alternatives in Indonesia.
By encouraging non-cash transactions, the country will be able to reduce the use of currency, which makes it more efficient and saves the budget of money printing and storing. Bank Indonesia also believes that non-cash transactions can be successfully implemented because it is more secure, more practical, and more efficient. Besides, by implementing non cash-transactions, Bank Indonesia will be able to control the circulation of money in the community.
In Indonesia, the e-money market is still wide open, and there are still many potential usages that have not been explored. The actual growth rate of e-money use has been significant over time, both in the number of cards issued and in the transactions using e-money. Each year e-money transactions have grown by 120 percent.
However, according to data from Bank Indonesia, until now growth in the use of e-money is still slow, which is approximately 5 percent. Growth per year is only approximately 0.3 percent to 0.5 percent. Growth is still considered slow because there are still many people in Indonesia who do not use e-money, whereas only approximately 9 percent of the Indonesian population uses e-money.
According to the Indonesian Central Bank (2014), electronic money is a means of transaction/payment that has the following elements: (1) it is issued based on the value of money deposited by users with the issuer; (2) the value of the money is deposited electronically in a medium such as a server or chip; (3) it is used as a means of payment with merchants who are non-issuers of electronic money; and (4) the value of the electronic money deposited by the user and managed by the issuer does not play the role of savings, as defined in banking rules and regulations.
The main purpose of the created e-money is to provide convenience in the transaction; the user does not need to spend cash and wait for change when shopping. In addition, the time required is quite short because the cash does not have to be counted, and signatures or PIN numbers for regular use debit and credit cards are not required.
Several types of transactions are covered by e-money, (1) daily transactions to a payment on a convenience outlet stores, bookstores, gas stations, and fast food restaurants, (2) e-commerce transactions via online shops, (3) transactions for public transportation: buses, commuter rail lines and highways. This study discusses the two types of transactions, namely the use of e-money for daily transactions in physical outlets and transactions in public transportation.
At the beginning, the e-money player is very eager to communicate with prospects and customers in its own way, but this has not been an effective way of communication. Consumers do not gain a full understanding and therefore cannot view as a whole the advantages of e-money as a payment instrument that is easy and practical.
The use of e-money for transportation was more successful than for transactions at the outlet. The reason is because consumers are forced to switch to this payment instrument en masse, and it is filled with government regulations. However, in practice, there are many consumer complaints that are perceived, not because of technical problems with the operation of e-money cards but rather due to a lack of understanding, which has an impact on the interest of consumers in continuing to use this payment tool.