Visa Int'l forecasts Indonesia debit card boom

Visa Int'l forecasts Indonesia debit card boom

Dow Jones, Jakarta

Indonesian consumer enthusiasm for non-cash deals could help U.S.
credit card company Visa International boost debit-card
penetration by double digits annually through 2009, a company
executive said.

The number of Visa-branded debit cards in Indonesia almost
tripled year-on-year to 6,756,000 in 2004, and the volume of
retail sales facilitated by the cards rose 32 percent in the same
period, said James Murray, Visa's executive vice president for
South and Southeast Asia.

"I could see (debit) card numbers growing like that for the
next three or four years without much trouble," Murray told Dow
Jones on Wednesday.

"Before the (1997-98 Asian financial) crisis, the payment card
market was really driven as credit cards... (now) the real engine
is offering basic electronic payment services to people on the
street."

Murray said that Visa, through its network of 17 member banks
including Bank Mandiri and Bank Central Asia, holds a 65 percent
share of Indonesia's credit and debit card market.

That puts Visa ahead of rivals Mastercard International and
American Express Co.

The driver of Indonesia's strong debit-card demand is a
combination of recent economic revival and a vast untapped market
of consumers who still rely on cash for financial transactions.

Indonesia's gross domestic product surged 6.35 percent
year-on-year in first quarter, putting the economy on track for a
projected 6.0 percent expansion for the year. That result would
outpace last year's 5.1 percent rise and place the official
target of 6.6 percent annual growth from 2004 to 2009 within
reach.

Growth in Indonesia's currently relatively small number of
bank depositors -- 60 million in a country of 210 million people
- will also likely help deliver new Visa card clients, Murray
said.

Visa statistics indicate that currently only 1.6 percent of
every US$100 in consumer spending in Indonesia is done with a
debit card, compared to around 8 percent in Thailand.

Visa will expand its range of debit card services for
Indonesia's consumers to include an automatic mobile-phone charge
payment system and an automatic cash-transfer system between Visa
card holders.

The projections of booming debit card use contrast with what
Murray describes as the "dismaying" downturn in foreign tourist
credit-card transactions in Indonesia after the massive Dec. 26
earthquake and tsunami that devastated the northwestern province
of Aceh.

Murray said foreign tourist Visa credit-card use in Indonesia
declined 7 percent year-on-year from the beginning of January to
the end of the week of May 8.

That decline threatens an annual $500 million in such
transactions in the country.