Indonesia Digital Payments Market Outlook to 2028

Indonesia Digital Payments Market Overview

• Indonesia Digital Payments Market reached a size of USD 88.5 billion in 2023, driven by the rapid adoption of mobile wallets and e-commerce. Increasing smartphone penetration significantly boosted online transactions. The COVID-19 pandemic accelerated digital transformation, encouraging businesses and consumers alike to adopt cashless payment solutions.
• Major players in the market include GoPay, OVO, DANA, and LinkAja due to their extensive integration with local e-commerce platforms, transport services, and a broad network of retail partnerships. Their user-friendly apps, promotional strategies, and alignment with Indonesia's growing digital economy further solidify their market presence.
• In 2024, ShopeePay has entered a strategic partnership with PT Jalin Pembayaran Nusantara to enhance digital payment accessibility through the Quick Response Code Indonesian Standard (QRIS). This collaboration aims to support Micro, Small, and Medium Enterprises (MSMEs) by providing safer and more efficient payment solutions, aligning with ShopeePay's goal to expand financial digitization across Indonesia.
• Jakarta, Surabaya, and Bandung are the dominant cities in the digital payments market in Indonesia. Jakarta leads due to its status as the capital city and its advanced digital infrastructure, making it a hub for both consumers and businesses adopting digital payments. These cities have seen significant investments in digital infrastructure, further enhancing their dominance.

Indonesia Digital Payments Market Segmentation

By Payment Method: The market is segmented by payment method into mobile wallets, bank transfers, and QR code-based payments. In 2023, mobile wallets dominated this segment due to their ease of use and the proliferation of smartphone users. Mobile wallets like GoPay and OVO have established a strong presence by integrating with popular e-commerce platforms and ride-hailing services, making them a preferred choice for consumers across the country.

By End-User: The market is segmented by end-user into individuals, SMEs, and large enterprises. In 2023, individuals dominated this segment due to the widespread adoption of digital wallets for personal transactions such as online shopping, bill payments, and peer-to-peer transfers. The convenience and incentives offered by digital payment providers, such as cashback and discounts, have further driven adoption among individual users.

By Region: The market is segmented by region into North, South, East, and West. In 2023, the Western region dominated the market due to its higher concentration of urban centers and technological infrastructure. This region benefits from better internet connectivity and higher income levels, which contribute to greater adoption of digital payments compared to other regions.

Indonesia Digital Payments Market Competitive Landscape

• GoPay: In 2023, GoTo Financial launched the GoPay app, making it available to consumers across all cities in Indonesia. This move aims to provide financial services to a broader audience, including those who do not use Gojek or Tokopedia. The app includes features such as free transfers, bill payments, and an expense report tool, emphasizing security with a five-step account protection process.
• OVO: In 2024, OVO announced the acquisition of Bonnet, a public electric vehicle (EV) charging consumer app. This move is part of OVO's strategy to expand its offerings in the growing EV market, making charging more accessible to its customers. The acquisition of Bonnet enables OVO to diversify its digital ecosystem beyond financial services, tapping into the rapidly expanding EV infrastructure sector.

Indonesia Digital Payments Industry Analysis

Growth Drivers:

• Rising Internet Penetration and Smartphone Usage: By 2024, Indonesia's internet penetration grew. Internet penetration is expected to reach 79.5% of the population, up from 78.1% in 2023. This rapid growth in internet access, combined with increasing smartphone usage, has significantly contributed to the expansion of digital payments which enables seamless access to mobile banking and digital wallet services, fostering the growth of the digital payments market.
• Government Support for Financial Inclusion: The Asian Development Bank (ADB) and KfW, the German state-owned development bank, are supporting the government's efforts through the Promoting Innovative Financial Inclusion Program, which aims to enhance access to financial services for vulnerable groups, MSMEs, women, youth, and those living in rural areas. By providing access to financial services for all Indonesians, the government is driving the growth of the digital payments market.
• Growing E-commerce Market: Indonesia's e-commerce market has experienced exponential growth. By 2029, the number of e-commerce users in Indonesia is projected to reach approximately 99.1 million, which is an increase of 33.5 million users (or 51.03%) from 2024. The synergy between e-commerce and digital payments continues to drive market growth, encouraging more consumers to adopt digital payment methods.

Market Challenges:

• Cybersecurity Threats and Fraud: The rise of digital payments in Indonesia has also led to increased cybersecurity threats and fraud. These incidents have raised concerns among consumers and businesses about the security of digital transactions. Ensuring robust cybersecurity measures is crucial to maintaining user trust and preventing further financial losses, making it a significant challenge for the digital payments market.
• Lack of Digital Literacy Among Rural Populations: Despite government efforts to promote digital payments, a significant portion of Indonesia's rural population remains digitally illiterate. This lack of digital literacy hinders the adoption of digital financial services, particularly among older and less educated populations. Bridging the digital literacy gap is essential for achieving broader financial inclusion and expanding the reach of digital payments across the country.

Government Initiatives:

• Indonesia Payment System Blueprint 2025: Launched in 2019, Indonesia Payment System Blueprint is an initiative that exists and was launched by Bank Indonesia (BI) in 2019. This blueprint aims to navigate the evolving landscape of the payment system in Indonesia, particularly in the context of a rapidly digitizing economy. The aim is to establish a payment system that meets the demands of the digital era, ensuring it is fast, safe, and affordable.
• National QR Code Standard: Indonesia has implemented a national QR code standard known as QRIS (Quick Response Code Indonesian Standard). This initiative was launched by Bank Indonesia and the Indonesian Payment System Association (ASPI) on 2019. QRIS aims to unify and streamline the QR code payment ecosystem in Indonesia, which previously consisted of multiple fragmented systems from various e-wallet providers and banks.

Indonesia Digital Payments Future Market Outlook

By 2028, Indonesia Digital Payments Market is expected to experience robust growth over the next five years, driven by increasing internet and smartphone penetration, government initiatives promoting financial inclusion, and the expanding e-commerce sector.

Future Trends

• Expansion of Digital Financial Services: Digital payment providers in Indonesia will continue to expand their services beyond traditional payments, offering more comprehensive financial solutions such as savings, investments, and insurance. This expansion will cater to the growing demand for integrated financial services among consumers, fostering deeper engagement and increasing user retention on digital payment platforms.
• Adoption of Biometric Authentication: As security concerns remain a significant barrier to digital payment adoption, the use of biometric authentication methods such as facial recognition and fingerprint scanning is expected to become more widespread. This trend will enhance transaction security and user convenience, encouraging more consumers to switch to digital payment methods and reducing the risk of fraud.