According to five sources familiar with Indonesia’s move, Jakarta plans on imposing fixed fees on select e-wallet transactions. The move could potential choke key revenue streams and raise costs for payment startups.
Providers of e-wallet services in Indonesia, Southeast Asia’s largest economy, currently customize fees for vendors: while they charge a premium from big retailers they absorb costs for smaller merchants, as an incentive to get them to use their platform.
According to sources familiar with the matter at hand, Bank Indonesia has already held talks with some of the biggest digital-payment startups on standardizing fees on QR code transactions. In August 2019, it had moved to standardize electronic payment systems that use matrix barcode.
Bank Indonesia did not respond to requests for comments.
Leading the pack of e-wallet startups is Indonesia’s own ride-hailing startup Gojek, which has the backing of tech giants including Alphabet’s Google, and OVO, which is backed by Gojek’s rival Grab.
Bank Indonesia, the country’s central bank wants to fix a select range of e-wallet transaction with 0.7% fees, said sources. The move is likely to deter smaller merchants from staying on the e-wallet network.
Fixed fees on payments at bigger vendors, like Starbucks, that are currently charged as much as 2%, would also dent revenue for the e-wallet firms, said sources. Fixed fees on transactions for bigger vendors at 0.7% is also in the works, said a source.
Big retailer are typically charged in the range of 0.5% to 2%, said a source.
Visa and Mastercard are charged in the range of 2% to 3%.
“This will hurt all of us,” said an executive at an Indonesian e-wallet firm, on the condition of anonymity, since he was not authorized to speak to the media.
Under the new proposed system, the e-wallet transactions fee will be split in three ways, said sources. It will be between the e-wallet companies, payment processors, and the National Electronic Transaction Settlement – a consortium of leading Indonesian lenders.
As of now, e-wallet firms either kept the whole fee or split with their payment processors.