WhatsApp Pay, unit of United States' free messaging firm, WhatsApp Inc., ready to operate in Indonesia, said the spokesman today (10/16) - Photo: Special

JAKARTA (TheInsiderStories) – WhatsApp Pay, unit of United States’ free messaging firm, WhatsApp Inc., ready to operate in Indonesia, said the spokesman today (10/16). To realize the plan, unit of social platform Facebook, now in talks with potential partners such as local unicorn GoJek, Ant Financial-backed Dana, and Lippo Group’ financial technology startup Ovo, and state-owned bank PT Bank Mandiri Tbk (IDX: BMRI).

The spokeswoman, Sravanthi Dev, refuses to provide more information on the plan cause the operator is still in discussion with potential partners. She also refused to comment when alluded to the difference in WhatsApp Pay features in Indonesia and India. Through integration with the Unified Payment Interface in India and had earned a million users since builded in 2018.

“I cannot give details yet because there is still a stage of negotiations with several partners in Indonesia. Later if there is clarity, I will explain more,” he told the media at the 2019 Indonesia Indonesia Summit event in Jakarta.

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’ 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, shown by Saas Anchanto data. 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. 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. 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 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 the founder.

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.

Recently, Bank Indonesia (BI) has put a 49 percent limit on foreign ownership in companies that offer electronic money services in a bid to better regulate such services amid growing interest in financial technology. The limit was set by central bank to all electronic money issuer companies, both operating and newly handing permits.

According to the rules, every company offering payment in electronic money services also must obtain a permit from the central bank. The new foreign ownership limit applies only to new investment, or to any existing firm who is changing ownership.

Based on central bank regulations, e-money businesses should secure a license from BI for various payment system service providers such as Principal, Issuer, Acquirer, Clearing Operator and Final Settlement Operator.

Out of the 26 companies licensed with the central bank as electronic money operators 11 are banks and the rest are non-bank institutions. Indonesia’s e-commerce industry is expected to grow rapidly in the years ahead and therefore BI set new rules to ensure that all firms maintain “the principles of prudence and adequate risk management” in accordance with national interests and consumer protection.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com