More consumer purchases made in cash
JAKARTA (JP): More than 90 percent of all consumer purchase and business transactions in Indonesia are still made in cash, Visa International country manager Ellyana C. Fuad said on Wednesday.
Ellyana said most of the local merchants were still reluctant to accept payments using credit, debit, charge, or cash cards despite the fact that the card payment could reduce risk and improve efficiency.
"Card payment is aimed at providing a cost-effective way of gaining benefits, thereby creating more efficient and more profitable business operations," she said at a seminar on the advantage of card payments.
Ellyana said merchants accepting payment cards could benefit from the lower cost of cash handling, which according to the Asian Banker Journal is Rp 280 to every Rp 1,000 a year in Indonesia.
This is higher compared to Hongkong with the cost of cash handling HK$0.09 for every HK$1 and Singapore with S$0.065 for every S$1.
"The total cost of cash handling in Indonesia is Rp 6.13 trillion a year," she said.
Citibank vice president for card product merchant sales Hengkie Liwanto said merchants accepting payment cards would also make the business run more efficiently, and would help increase sales.
"Cash handling with risks like fraud, fake money, and the risk of transporting money could be reduced," he said.
Hengkie said paying using a payment card is a lot faster than cash, with an average processing time of 10 to 15 minutes.
"It also saves on labor and operational costs," he said.
Chairman of the Indonesian Retailers Association Steve Sondakh said many retailers were still reluctant to accept payment cards due to the high fees the issuing banks charge.
Hengkie said that the fees were of little consequence compared to the increase in revenues the retailers could achieve after accepting card payments.
A study on spending patterns of 11,905 new cardholders, in a six-month period shows that average spending totaled Rp 780,000 a month, and 49 percent of the cardholders had increased spending by more than 50 percent, Hengkie said.
He said in 1999 sales volume for Visa and Mastercard amounted to Rp 11 trillion in Indonesia. This figure will likely grow because more and more people will want to pay with cards, Hengkie added.
"There have not been a merchant whose sales and revenue dropped by accepting card payments," he said.
Sondakh said the payment method using credit, debit, charge, and cash cards in various sectors in Indonesia is still low compared to other countries in the region.
According Sondakh, only about 21.4 percent of transactions in the country's hotel industry use payment cards, much higher than 14.8 percent in department stores and 2.1 percent in restaurants.
"This can still be increased, and will increase along with Indonesia's economic growth," Sondakh said.
Ellyana said Visa credit card holders in Indonesia totaled 1.3 million people, with 13 member banks including Bank Central Asia, Lippo Bank, Bank Bali, BNI, BII, and Bank Mandiri.
Within the next five years she hopes the number of card holders will reach 12 million.
"We have bank population of more than 60 million, we are sure to reach the 12 million number in five years," she said. (10)