Indonesian conglomerate Salim Group and retailer MAP are the latest companies eyeing the digital payment space and have applied to Bank Indonesia for an e-money licence, three people aware of the development told DEALSTREETASIA.
Under Indonesia’s new set of rules for fintech companies, digital payment services can only be offered by providers after obtaining a central bank licence. Salim Group and MAP are among more than 150 companies that have applied for this licence.
An email query sent to Salim Group and MAP by this portal did not elicit a response.
In June 2017, Salim Group acquired a 51 per cent stake in a local bank, Bank Ina Perdana, for $42 million. The acquisition was widely seen as a move by the conglomerate to enter into digital payments. This was Salim Group’s second foray into the banking industry; it had taken over Bank Central Asia in 1970 but transferred its ownership to the Indonesian government in 1998 in the wake of the Asian financial crisis.
Salim group operates in food, retail, automotive, telecommunications, infrastructure and other sectors across Indonesia and the Philippines. It recently announced an e-commerce JV with Korea’s Lotte group, iLotte, with an investment of $100 million.
MAP is a leading lifestyle retailer in Indonesia with over 2,200 retail stores and a diversified portfolio that includes sports, fashion, department stores, kids, food & beverage and lifestyle products. It got listed on the Indonesia Stock Exchange in 2004 and has over 26,000 employees.
In October last year, Bank Indonesia suspended top-ups to e-wallets for at least five service providers, including GrabPay, TokoCash and ShopeePay. Until then, service providers were working under the impression that it was legal to conduct digital payment transactions as long as they were conducted within their network. However, the central bank clarified that only e-money licence holders could offer e-wallet services.
Indonesia is the fastest growing mobile commerce market in the world. Go-Jek is one of the few technology companies in the country that have secured an e-money licence. Its CEO Nadiem Makarim recently said that the KKR and Warburg Pincus-backed unicorn will make the expansion of its digital-payment service Go-Pay in 2018 a top priority. As part of its digital payments push, Go-Jek in December announced it had acquired three local fintech companies — offline payments processing company Kartuku, top online payment gateway Midtrans, and local community group-based saving and lending network Mapan — to beef up its payments arm.
Other Indonesian conglomerates already operating banks and digital payment platforms are Lippo group’s Ovo, which recently partnered with Grab, and Sinarmas group.
Indonesia is the world’s fourth most populous country with young, tech-savvy citizens raised on smartphones and apps. The country has the second highest dependency on cash in the world after India, according to the World Bank.