TEMPO.CO, Jakarta - The Internet and the information technology revolution have made the world economy increasingly borderless with numerous online cross-border business transactions taking place on a daily basis.
The government has taken a right step with the plan to launch the national payment gateway (NPG). The system that is aimed to facilitate online payments to and from across the world is now a pressing necessity.
If the plan had not been shelved during Susilo Bambang Yudhoyono's administration, Indonesia would have had the NPG up and running. As the country's creative economy sector boomed in the past year, the current government and Bank Indonesia set out to bring the plan to reality, and if the central bank achieves its targets, this vital project can be completed by the end of the year.
Indonesia is, in fact, lagging behind other developing countries such as India, Bangladesh or even Palestine, which have already established their own integrated payment systems in recent years. The system allows an inclusive economy for all, from large and small entrepreneurs, startups to farmers. Consumers' and producers' needs can be matched faster. Direct payment transactions will also facilitate the business world to grow more efficiently.
There are currently at least three local service providers offering integrated payment services but their coverage is very limited. Foreign players offering wider coverage, such as MasterCard and Visa, have been reaping huge profits from the booming e-commerce in the past decade. Last year alone, e-commerce transactions in Indonesia reached US$12 billion, or around Rp150 trillion.
The NPG will offer not only financial gains but also other non-financial benefits. Through the system, respective institutions could obtain valuable data which information technology practitioners call 'big data' by observing public spending patterns, lifestyles, trends as well as the export-import traffic. They are same data that the old players, namely Visa and MasterCard, capitalize on to enhance their marketing strategies.
The NPG will also enable us to make use of 'big data' to develop a better-targeted local e-commerce. The ease of online payment is certain to give the creative economy a big boost. Tax payments can also be monitored better through increased non-cash transactions.
But challenges do exist. For example, it would not be easy to shake the old players' dominance. But a national financial literacy survey carried out by Financial Services Authorities (OJK) in 2013 showed that only 21 percent of the Indonesian population are knowledgeable about banking, meaning that there is still an untapped market with opportunities abound for the NPG.
Technically, there should be no more hurdles. The necessary banking infrastructure and networks through ATMs, the internet and mobile phones have long been in place. What must now be developed are regulations and coordination to create synchronized integrated networks. Bank Indonesia and the OJK have pivotal roles in pressing ahead with the task and to create opportunities for local players. Too much is at stake to further delay the NPG. (*)
Read the full story in this week's edition of Tempo English Magazine
