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Digital payments are gaining traction in a somewhat unusual way in Indonesia—through popular motorbike taxi-hailing app Go-Jek's service GoPay, which launched in April 2016.
With a valuation of about $1.3 billion, Go-Jek has emerged as one of Indonesia's largest and most promising internet services company. The service boasts almost 30 million app downloads and has some 250,000 drivers working for it. Go-Jek has demonstrated a strong appeal for city residents who use it to hire motorbike taxis, which are faster than cars when dealing with widespread urban gridlock.
But Go-Jek has expanded its suite of services well beyond Go-Ride, its taxi-hailing offering. Its users can also order groceries, hire couriers and pay bills, among other services. Mobile wallet GoPay now handles the payments for many of Go-Jek's transactions—company CEO Nadiem Makarim told Bloomberg this month that GoPay is now used for more than half of them. Users can add money to GoPay by connecting their bank account or depositing cash with taxi drivers.
GoPay is not alone in Indonesia's digital payments service sector. In December 2016, research firm JakPat polled mobile internet users in Indonesia about their use of "digital cash," defined as a pre-paid, reloadable method of digital payment that included both apps and payment cards. It found that GoPay had the fourth-highest rate of usage among digital cash users, at 27.1%.
Go-Pay trailed state-owned bank Mandiri's e-Money, used by 43.8% of digital cash users, Bank Central Asia's Flazz (39.1%) and telecom PT Telkcomsel's T-Cash (29.1%).
However, GoPay may have an advantage over these more traditional competitors. JakPat's survey also found that paying for transportation was the most widely used reason that respondents turned to digital cash. In fact, 46.7% used digital cash to purchase a taxi or bus ride, a higher number than those who relied it for ecommerce (42.0%) or to reload a mobile device with more minutes or data (31.8%).
Still, Go-Jek is likely to face tough competition from other ride-hailing services in Indonesia. Competitor Grab now offers its own GrabPay digital payment service.
Uber, another large player in the space, has so far been content to rely on a mix of third-party payment systems, taking the position that customers value the flexibility they offer. But having abandoned China, Uber now has more funds to direct towards winning market share in Southeast Asia countries like Indonesia.
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