While the total value of credit card transactions in the country has significantly increased in the last two years, the amount of credit card nonperforming loans (NPLs) has also arisen, reports Bank Indonesia (BI).
As of November 2007, credit card NPLs amounted to Rp 2.87 trillion (US$309.93 million), up about 67 percent from Rp 1.72 trillion in December 2006, BI deputy director for accounting and payment systems Sri Suparni told The Jakarta Post on Friday.
However, Suparni said, the 2007 NPLs rate was only about 4 percent of the total credit card-derived loans worth Rp 72.77 trillion, increasing slightly from about 3 percent in 2006.
The total value of credit card transactions in 2006 amounted to Rp 57.33 trillion.
"Credit card transactions last year showed an increase of about 27 percent, with more people using their credit cards to purchase goods rather than to make cash withdrawals," she said.
In 2007, credit card users spent Rp 69.3 trillion on credit card purchases and Rp 3.3 trillion on cash withdrawals, while in the previous year the figures were Rp 54.8 trillion and Rp 3.5 trillion.
Lani Darmawan of the Indonesian Credit Card Association (AKKI) said credit card users usually used their cards for cash withdrawals in emergency situations.
The interest rate charged on cash withdrawals is usually between 0.25 percent and 1 percent higher than the interest rate on credit card purchases.
Darmawan said credit card users had recently become more aware of the primary purchasing function of credit cards.
"It also means the AKKI has successfully educated credit card users to use their cards properly," said Suparni.
The AKKI has been advising people to use credit cards for purchases, not for cash withdrawals. It expects the rate of cash withdrawals to further decline this year.
Credit card issuers have expressed similar expectations.
Suparni said that last year close to 9.2 million people owned credit cards, up from 8.21 million in 2006.
"With the increase in the number of credit card holders and transactions, we expect the amount of credit card transactions will continue to grow this year," she said.
As of December last year, the country had 19 banks and one non-bank financial institution issuing credit cards, with the largest issuers Citibank, Bank Mandiri, Bank Central Asia (BCA), Bank Negara Indonesia (BNI) and HSBC bank.