A short while ago Visa published Global Payment Tracker 2012 which reports on the payment methods used around the globe, including Indonesia. According to the report, in various points of sales, 57% uses debit cards and 83% uses credit cards. On the other hand, e-commerce transactions are still conducted using manual methods, including cash on delivery. This fact was revealed by CEO of Lazada Southeast Asia, Maximillian Bittner during Google Think 2013.
My first impression of this is that a lot of this still has to do with trust issues. When we conduct offline transactions, consumers can inspect the products directly and they can determine the sellers’ trustworthiness much more easily. With online transactions, there’s still a lot of concerns on the safety of the transaction as well as whether the delivered product meets expectations. This is a significant homework that e-commerce players and marketplace providers must deal with to overcome any trust issues that may arise.
Personally I think credit card is the most appropriate method of payment for e-commerce transactions. Why? Because transactions with credit cards are done on the spot but payment is made at a later date. This means consumers can evaluate or review each transaction conducted before making a payment. Consumers can contact the bank to dispute any questionable transactions and clarify the issues before money changes hands.
Debit card payments (or bank transfers) however, is much more commonly done in Indonesia. The fact is the number of Indonesians owning credit cards is far below the number of bank account holders. Even so, the risk of e-commerce payments made through debit cards is clear. All payments are done up front, which complicates any refund process should there be fraud. There is also a greater risk when sensitive information, (such as card number and other private data) gets leaked online.
Cash payment is clearly the safest option but in what is growingly a cashless society, the practicality of using plastic money should be a priority.
One solution to this payment issue is clearly through masking via another identity, such as a PayPal account which leverages an email account. Considering PayPal has yet to adopt debit card or savings account as its payment source in Indonesia, local solutions such as IPAYMU, which is a PayPal partner, can become an ideal payment method for Indonesian e-commerce transactions. Another solution may be e-wallet which is being promoted by many telecommunications carriers (which has far more subscribers than banking customers).
2013 is becoming an important year for the growth of e-commerce business in this country. With more trusted merchants, easier (and more) accepted payment methods, and more reliable delivery methods, e-commerce will become an even more important part to drive productive consumption for the archipelago.
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