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Asia

After India, WhatsApp’s Next Mobile Payments Move Is in Indonesia

Indonesia’s e-commerce industry is expected to grow to $52 billion in 2023.

whatsapp screenshot

Facebook-owned messaging service WhatsApp is currently in talks with digital payment firms in Indonesia to launch mobile transaction services in the country, Reuters reported earlier this week.

If the plan goes through, Indonesia will become only the second country where WhatsApp has introduced mobile payment services.

Last month, it was reported that WhatsApp Pay is on the verge of launching in India. The launch was delayed due to local data storage rules, but according to The Economic Times, the necessary data storage facilities have been created to introduce the service to the app’s entire user base in India, which is estimated to be between 350 million and 400 million users.

Much like in India, WhatsApp wants to tap into Indonesia’s growing e-commerce sector. The southeast Asian country is also one of WhatsApp’s biggest markets globally with over 100 million users.

There will be a difference between the services in India and Indonesia, according to Reuters. In India, WhatsApp pay will offer direct peer-to-peer payment service. However, Indonesia has tougher licensing regulations and the service will simply provide a platform to support payments via local digital wallets.

As Reuters reports, the Indonesia model could “could become a template for Whatsapp to adopt in other emerging markets to get around regulations on foreign players creating their own digital wallets.”

Indonesia’s E-Commerce Industry is Fast Growing

Investment bank Morgan Stanley estimated the size of Indonesia’s e-commerce market at $13 billion in 2018 and projects it to grow to $52 billion in 2023.

“There are 195 million smartphone users in Indonesia and only about 30 million online shoppers. The growth potential of the user base is still clearly huge,” the Morgan Stanley report adds.

In a report last year, management consulting firm McKinsey identified several factors for the growing e-commerce industry in Indonesia. One, smartphone and internet penetration are rising. Two, Indonesia’s large population is also seeing a rise in its purchasing power due to macroeconomic growth. And the country also has a large young population who are using and adjusting to new technology.

Low data costs and a growing number of people with bank accounts are also enabling Indonesia’s e-commerce growth. According to Morgan Stanley, about 49 percent of the adult population in Indonesia had a bank account in 2018, compared with 20 percent in 2011.

Smartphones are also much more affordable in Indonesia, making them more accessible to the population. “With more than 40 percent of its population on smartphones, about 70 percent of the country’s internet traffic comes from these devices,” notes Eijas Ariffin of The Asean Post. And as highlighted by the McKinsey report, almost 75 percent of online shoppers in the country use mobile devices.

With the country’s economic growth and e-commerce industry thriving, WhatsApp pay’s move to Indonesia could pay off in the long term.

Rahima Sohail is a contributor to Globely News, writing on U.S. politics and the geopolitics of Asia. She was previously a sub-editor and producer at The Express Tribune, a Pakistani English-language daily. She spends most of her time reading and ranting about politics and football.

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