Indonesia e-Commerce review

Indonesia's E-Commerce journey is already become public secret that we (indonesian) are already left behind by other countries, even to our next door countries which we always accuse them as Indonesian culture's thief.

In the beginning of 90, Indonesia already have payment gateway for Credit card, PT Cipas Indonesia. But on that time, the Indonesian economical crisis forces the acquiring bank which Cipas connected to, bankrupt and closed.

Still in crisis, around 2000, emerge new payment gateway. But their usabilities are more specific which is only for billing payment like PLN (Electricity), PAM (Water), Telkom (Phone), etc. From english terminology is not wrong. They are, a gateway between customer and the enterprises (PLN, PAM, etc) to do billing payment. So customer and enterprises would have advantages. Customer just walk in to 1 point of payment, and they can pay all kind of billing there. And the enterprises also just receiving the money from validated 3rd party and open connection to their system to update. But this nothing to do with e-commerce, but it's more on enhancement of the billing payment service. This kind of payment gateway cannot be use for other payment such as retails or ticketing. What we do expect as total payment solution isn't arrive yet or previously stopped due to crisis.

ATM and Debit is very popular in Indonesia. Almost everybody in the big cities, have ATM Debit, especially from a bank which are well known for a jokes of "Bank Cape Antri" (Tired to Queue Bank). Even tough the queues are miles, their customers are the most enormous rather than others (for individual). There were not only queuing at the teller, but also at the ATMs, when pay check arrived, a very long queue will emerge just like holidays (Ramadan and christmas). And around year 2000, they begin to start Internet Banking which we can say quite Revolutionary. Start with phissing cases to the use of the safest technology, Token technology, they have gathered. We can say that data security is handled in good manner. And so other banks follows the footsteps which customer may not have to queue again in ATM just to do non-cash transactions such as transfers, billing payments, etc.

Around 2006, cashless concepts emerged, that is e-wallet, which this concept are already primary requirements for payment outside Indonesia. For example in Japan, people just need to tap their mobile phones over a receiver device. While in Indonesia, Flazz is the first time the wallet being introduce for Payment to people by BCA. IMHO, this concepts seems overlapping with ATM/Debit, but nonetheless it offers conveniences to reduce the size of our wallet (real one) because of our currency denomination which is too small. More less of appearance, E-Toll Card being launched by Bank Mandiri, started with the joint partnership with PT Jasa Marga as a solution to fast payment (tap) for Toll Road payment. Even though started with small rumors that the device deducted more than once for single payment, the system was quite successful in the future. Also added a special gate of unattended post for E-Toll card holder. Next, continuing the business with their partners such as Alfamart (Convenience Store) which can use this kind of wallet.

Also followed by non-banking entity, that is Telkomsel, a GSM Operator, release a Telkomsel Cash (T-Cash). Same like other wallet, this has a limitation up to 1 million Rupiah (IDR). But for Telkomsel customer who already register themselves, can have limitation up to 5 million Rupiah. They just need to register their account in Grapari (Customer Center) then top up the account with cash or debit or credit cards. Wallet concepts will be discuss later on.

And on 2007, new Internet Payment Gateway (IPG) appeared who specialized themself for Internet Payment using Credit Card. The same concept with other countries are already done successfully before, this IPG runned by PT Nusa Satu Inti Artha (NSIA), we might say, had a quite good response. Begin with small merchants, to Java Festival Production which already successfully selling tickets online, internet. Followed by airline, CITILINK, which quite have bleeding experiences at first, because of the Fraud case and receive Tiering from VISA/Mastercard. But from these experiences, together with NSIA, trying to reduce the fraud numbers was a big success, reduced to 0.16% of fraud. Then other airlines follow such as Garuda Indonesia, Batavai Air, Merpati, and also other merchants. Currently, as informed, NSIA already connected to 2 Banks, and keep adding more banks. Last confirmation, the banks are BNI, Citibank, and newer bank is Bank Mandiri.

As NSIA appearance, foreign banking which already dominated local banks, also join to spice up the Indonesia's e-commerce stage. BII Maybank with MIGS (Mastercard Internet Gateway Service). As IPG, MIGS also have the same concepts as NSIA. Basically IPGs (MIGS or NSIA) are connected to Bank Acquirer. And these IPGs will be as the bridge between merchant and acquirer Bank. Next we will have intense discussion in this concepts.

Before local IPGs starts in Indonesia, AirAsia Indonesia already use IPG, but they using foreign IPG which based in Singapore (ENets), which might using foreign currency for the transactions. So the foreign exchange from the merchant perpective would be a dilemmatic for the income they would get or the ability of foreign currency choices.

Till this day, they are already IPG coming in besie NSIA and BII MIGS, that is Infinitium which also utilize MIGS system as their core engine processing. And almost certain in the future, beside IPG Companies, EDC Switching companies would also be joining to fertilize the Indonesian E-Commerce. And merchants have more powers to choose which IPG serve the best for them.