JAKARTA (TheInsiderStories) – WhatsApp, United States’ Facebook Inc’s messaging service, reportedly in talks with multiple Indonesian digital payment firms to offer their mobile transaction services, Reuters has reported today (08/20), in a bid to tap the nation’s fast-growing e-commerce sector.
Sources said, WhatsApp is in advanced talks with companies such as local unicorn GOJEK, Ant Financial-backed Dana, and Lippo Group’ financial technology startup Ovo, with the deals expected to be finalized shortly. Based on the country’ strict licensing regulations, WhatsApp will only serve as a platform supporting payments through local digital wallets in Indonesia.
Southeast Asia’s largest economy was home to 260 million people and one of the top five markets globally for Whatsapp, with over 100 million users. The country is set to see its e-commerce industry tripling to US$100 billion by 2025, according to some estimates, but it also has some of the region’s strictest digital payments regulations.
Indonesian E-Commerce Association (idEA) data showed that the number of internet users in Indonesia continues to grow every year. In 2017, the number of internet users was 72.8 million, which then rose to 102.8 million in 2018. In 2019, Indonesian internet users are predicted to reach 112.6 million.
While sample data from e-commerce in the country shows an average of 87 percent of visits come from mobile usage. These findings further prove that the share of mobile device users is considerable potential in reaping a higher number of visits.
Predicted, the trend of the e-commerce industry in Indonesia this year grew by 31.3 percent and reached profits of up to $3.8 billion, developer Saas Anchanto data recently released. This raises optimism that the adoption of credit cards, debit cards, and e-money will continue to rise with the encouragement of banks and cellular operators as service providers. Moreover, an online transaction is still one of the main choices of consumers in Indonesia.
Indonesia could become the second country worldwide where WhatsApp introduces such services, as it awaits regulatory approval from India, its biggest market by users, that has been delayed due to local data storage rules. But unlike in India where it plans to offer direct peer-to-peer payment services, WhatsApp will simply serve as a platform in Indonesia supporting payments via local digital wallets due to tough licensing regulations, Reuters source said.
The Indonesia model could become a template for Whatsapp to adopt in other emerging markets to get around regulations on foreign players creating their own digital wallets, the sources said.
It said WhatsApp is in advanced talks with several digital payments firms including ride hailer Go-Jek, mobile payments firm DANA, backed by China’s Ant Financial, and fintech startup OVO, which is owned by Indonesian conglomerate Lippo Group and is also backed by ride-hailing company Grab, the sources said.
Deals with the three firms are expected to be finalized shortly, the people said, declining to be named as the talks are private. WhatsApp has also approached one of the largest banks in Indonesia PT Bank Mandiri Tbk(IDX: BMRI), which operates a digital wallet, they said.
The Indonesia plan comes after Facebook CEO Mark Zuckerberg announced earlier this year that it would be rolling out WhatsApp payments to some countries. The payments feature will enable businesses to now accept payments from customers in addition to the existing ability to interact with customers via alerts and the new product catalogs.
“Payments is part of the vision that I am particularly excited about. I believe it should be as easy to send money to someone as it is to send a photo. We’re already testing this in India. We have about a million people. It’s already being used a lot and the feedback so far is great. We’re already working on rolling out in a number of countries later this year,” said Zuckerberg.
Facebook believes that the future is private and intends to solely build its products with privacy in mind over the next couple of years. Payments are just one of the ways the company is looking to bring this privacy-focused vision to life.
In some countries, more people have WhatsApp accounts than bank accounts. The ability to send money as easy as it is to send a message via WhatsApp is likely going to revolutionize the payments industry as we know it.
By layering payments on top of private messaging, Facebook will position its products in a much more attractive way to both businesses and individuals looking for more private experiences that offer holistic features. Payments are no doubt at the heart of it.
Written by Lexy Nantu, Email: firstname.lastname@example.org