Fixed Fees Coming for Indonesia’s E-Wallet Transactions
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Indonesia’s central bank is planning to impose fixed fees on some e-wallet transactions in a move that not only eliminates pricing flexibility but could also deter small merchants from participating.
Bank Indonesia is already in talks with the country’s largest digital payment startups to standardize fees on QR code transactions, according to a report citing five unnamed sources.
Indonesia’s internet economy has a bright outlook with a Google, Temasek and Bain & Co report projecting the $40 billion market this year to grow more than three-fold by 2025. The market houses numerous global household e-wallet players including homegrown ride-hailing giant Gojek.
The central bank wants to fix some e-wallet transaction fees at 0.7 percent – a move that could push out smaller merchants on the network that are currently being charged at very levels as an incentive. The would also hit revenue lines from large merchants, like Starbucks, which are already being charged up to 2 percent.
In addition to pushing out smaller merchants and cut revenue from larger merchants, the central bank’s plan would also require e-wallet transaction fees to be split to an additional party: major Indonesian lenders.
Under the new system, e-wallet transaction fees would be split between three parties: e-wallet companies, payment processors and the newly included National Electronic Transaction Settlement consortium made up of major local lenders which were previously not involved.
This will hurt all of us, said one unnamed executive at an Indonesian e-wallet company.
Questions & Answers
Q.Which specific type of e-wallet transactions are targeted by the central bank's proposed fixed fees?
Which specific type of e-wallet transactions are targeted by the central bank's proposed fixed fees?
Bank Indonesia is planning to standardize fees on QR code transactions. This move aims to fix some e-wallet transaction fees at 0.7 percent across the board, impacting various parties involved in the digital payment ecosystem.
Q.What is the projected value of Indonesia’s internet economy, and when is this growth expected?
What is the projected value of Indonesia’s internet economy, and when is this growth expected?
Indonesia’s internet economy is projected to reach $40 billion this year. A report by Google, Temasek and Bain & Co suggests this market will grow more than three-fold by 2025, indicating significant expansion in the coming years.
Q.How will the proposed fixed fees affect the distribution of transaction revenue among parties involved?
How will the proposed fixed fees affect the distribution of transaction revenue among parties involved?
Under the new system, e-wallet transaction fees would be split between three parties: e-wallet companies, payment processors, and the newly included National Electronic Transaction Settlement consortium, which comprises major Indonesian lenders previously uninvolved.
Q.What are the potential negative impacts of fixed fees for both small and large merchants?
What are the potential negative impacts of fixed fees for both small and large merchants?
The fixed 0.7 percent fee could deter small merchants, who currently benefit from lower rates, and reduce revenue for large merchants, like Starbucks, that are presently charged up to 2 percent. This eliminates pricing flexibility for all.