4 Payment Methods Used in Indonesian Online Transactions

Payment methods is the core of online transactions. Providing solid payments maximizes time efficiency and data accuracy. As internet users are now massive, the payment that supports online transactions also varies over time.

Online transactions are widely used in Indonesia as one of the countries with the highest number of internet users. Business owners are rapidly shifting their payment to online systems to match their customers’ payment behavior. Get to know about payment methods that are used in Indonesian online transactions below.

About Online Payment

Like how it’s called, online payments are the type of payment transactions that carried out using the internet or an online system. Whilst, a payment method is the payment channel chosen to transfer money from customers to business owners.

Rapid technological developments have made the types of payment methods increasingly diverse, allowing customers to choose the method that best suits their preferences. For instance, digital wallets, virtual accounts, and many more.

Various business transactions ranging from online shopping to direct transactions in-store can use online payment. Even smaller amounts of transactions in MSMEs also starting to adopt online transactions in Indonesia. The COVID-19 pandemic is one of the catalyst factors that accelerate this online payment behavior.

One of Indonesia’s payment breakthroughs that is easily popular with customers is the QR Code Indonesian Standard (QRIS). Since its launch in 2019, this online payment has been used by merchants from various groups, especially MSMEs.

Payment Methods in Indonesia

Let’s break down some of the payment methods that are widely used by Indonesian customers in their daily online transactions. By understanding this matter, you might be able to gain clarity in determining what is the most suitable payment method for your business.

Virtual Accounts

Virtual account (VA) payment is a virtual account that is used to receive payments. This account contains a customer identification number created by the bank partner based on the company’s request to carry out transactions with their customers or merchants.

A virtual account does not have a regular bank account number, but a series of unique numbers instead. There are 2 types of VA used in Indonesia, fixed virtual accounts and non-fixed virtual accounts. Fixed VA is a permanent number because it is connected directly to customers’ phone numbers, while non-fixed VA is usually a unique number only used for one-time transactions.

The VA system allows payment confirmation to take place automatically without the need to send a transfer receipt. Virtual account payments are suitable for customers who have a bank account and prefer practical payments from their mobile banking.

Customers no longer need to retype the company bank account and the amount to be paid in their mobile banking app. This innovation can increase customer satisfaction with their shopping experience at a business.

QRIS

Quick Response Code Indonesia Standard (QRIS) is a QR payment standardization developed by the payment system industry and Bank Indonesia. This standardization has gone through several trials and was then officially launched on August 17, 2019.

QRIS is mostly targeted at daily transactions including MSMEs and aims to increase transaction efficiency, accelerate financial inclusion, and advance the MSMEs industry. These three things can ultimately encourage Indonesia’s economic growth.

This payment method is carried out in-store by customer scanning QRIS using their chosen payment application, such as mobile banking or digital wallet. Then, the customers will be directed to the payment page to input the amount of money they should pay and finish off the payment in their mobile app.

Now we can easily find QRIS flyers attached to shops or even merchant carts to accept online payments. This type of QRIS is called static QRIS. In the other hand, the QRIS dynamic is only created by specific invoices. So, the invoice already contains invoice details and the customer just needs to confirm their payment by scanning from mobile banking or digital wallet.

Digital Wallet

A digital wallet or e-wallet is an electronic service for storing payment instrument data, including payment instruments using cards and/or electronic money. The main difference between e-wallets and e-money is you can store payment card data in e-wallets while e-money only available to top-up saldo without connecting to your bank account.

Overall usage of e-wallets and e-money is similar, that’s why Indonesian people mostly mix them up and only call them e-wallets. This payment method can be used for various transaction purposes, such as to pay for shopping transactions or business invoices.

This type of online payment tends to be popular among the younger generation who prefer the practicality of payments. In general, e-wallet payments also have various promotional offers that attract customers.

The digital wallet is provided by Payment System Service Providers who must obtain permission from Bank Indonesia to be able to run this service. The government has also issued proper regulations which are contained in Bank Indonesia Regulation No.18/40/PBI/2016 and Bank Indonesia Circular Letter No.18/41/DKSP concerning the Implementation of Payment Transaction Processing.

Credit Card

Credit card payment is usually carried out using an EDC machine when you pay at offline stores. But, now credit card payment is also available online using payment service providers. We need an online payment page to facilitate customers to input their card information details without any physical machines like EDC.

The transaction scheme is that the payment is fulfilled first by the card issuer, then the cardholder is obliged to pay according to the agreed time to the card issuer. In general, credit cards have transaction limits according to the profile of each cardholder.

The amount of the limit usually does not exceed the income earned each month. So that transactions can be adjusted to suit customer capabilities. In today’s connected world, the potential for conducting international transactions is also increasingly wide open.

Cards with the Visa and Mastercard logos can be accepted in many countries so they can facilitate international transactions between local businesses with international customers or vice versa.

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