Indonesia is among the top drivers of e-money growth in Southeast Asia alongside neighboring Malaysia, Singapore, the Philippines and Thailand, according to an inaugural report commissioned by Standard and Poor’s (S&P) Global Market Intelligence.
The 2019 Southeast Asia E-Money Market report finds that the number of e-money transactions in the region increased by more than 31 percent in 2018, with Indonesia and the Philippines showing the greatest growth potential for non-bank e-wallets.
E-money dethrones debit and credit cards as the reigning payment method in Southeast Asia, with more than 10 billion aggregate transactions in 2018, the report shows. Of the more than 10 billion e-money transactions in Southeast Asia last year, 34 percent occurred in Singapore – making it the largest hub of cashless transactions in the region.
The number of cashless transactions in Indonesia rose to over 2 billion in 2018, accounting for around 20 percent of the total 10 billion transactions in Southeast Asia.
Furthermore, the report shows that the popularity of non-bank e-wallets such as the ones offered by ride-hailing app companies Grab and Go-Jek has bolstered the growth of ride-hailing and e-commerce in the region.
“E-wallets aligned with high frequency and scalable use cases like ride-hailing and e-commerce are likely to grow and garner market share across the region. The volume of transactions processed through e-wallets is gaining steam. For example, we estimate that e-wallets' share of total e-money volume in Indonesia grew to 36 percent in 2018 from less than 10 percent in 2017,” said S&P Global Market Intelligence fintech analyst Sampath Sharma Nariyanuri in a statement.
The growing chasm between the high availability of smartphones and unbanked population in cash economies such as Indonesia and the Philippines creates strong potential for e-wallet uptake, according to the report.