Top 5 Alternative Payout Methods in Indonesia in 2024

Indonesia's payment landscape is undergoing a significant transformation. Alternative Payment Methods (APMs) are radically altering the landscape as:

• Banked citizens are moving away from traditional banking towards innovative, digital solutions that better meet their lifestyles and spending habits; and
• Unbanked citizens are moving towards digital solutions, too, but for entirely different reasons: approximated core banking services and convenience.

In this piece we focus 5 of the most preferred alternative payout methods in Indonesia, highlighting their unique features and market positions.

E-Wallets / Mobile Wallets

Today, over 110 million people are using OVO's e-wallet. That's roughly 40% of the population - an incredible success story. Other popular e-wallets includeDana, ShopeePay, GoPay, and LinkAja.

Virtual Accounts

Virtual Accounts function like unique bank account numbers, but without exposing actual banking details. Virtual Accounts enable customers to make secure transactions via ATMs, Internet banking, or mobile banking using a unique 16-digit payment code.

The widespread adoption of Virtual Accounts in Indonesia can be attributed to several factors, including:

• They cater to the needs of the large unbanked population, providing a secure and accessible payment option without requiring a traditional bank account;
• Ease of use and integration with various online platforms make them a preferred choice for both consumers and businesses, so they are applicable everywhere, for all types of transactions; and
• They are widely recognized as bridging the gap between conventional banking systems and the digital economy. By facilitating seamless transactions while ensuring security and privacy, Virtual Accounts are a nearly perfect middle ground.

QRIS (Quick Response Indonesian Standard)

QRIS has standardizing non-cash payments in Indonesia. QRISallows businesses to accept a wide range of payments, including bank transfers and various e-wallets, through a unified QR code system. QRIS has facilitated the digital transformation of payments in both physical and online stores by making transactions more convenient for consumers and businesses.

Over-the-Counter Payments in Supermarkets

For Indonesia's unbanked and underbanked populations, cash transactions at supermarkets and convenience stores like Indomaret and Alfamart are popular choice. For OTC payments, the store acts as payment collection points for online purchases, bridging the gap between traditional and digital economies. OTC payments enable sellers to reach new customers, particularly in rural areas.

PayLater (BNPL)

PayLater, a nearly ubiquitous service in Indonesia, has seen significant growth, particularly among Millennials and Gen Z. With low credit card penetration in Indonesia, PayLater offers a flexible, credit-like solution for online purchases. It's increasingly popular on e-commerce and travel platforms, aligning with the lifestyle and consumption patterns of younger generations. The flexibility of the service is also enabling it to make inroads into older generations, with significant growth expected throughout the next decade.

These alternative payment methods, and many more, have gained significant market share in Indonesia due to their convenience, security, and widespread acceptance.

As digital transformation continues to sweep across the country - and region - it is essential for businesses to support these preferred payment and payout methods to cater to the evolving preferences of their customers.

Learn more about Indonesia's dynamic eCommerce market.