COVID-19 pandemic has hit the Indonesian payment market as consumers are staying away from non-essential purchases and as a result, card payments value will register a subdued growth of 1.7% in 2020, forecasts GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Payment Cards Analytics reveals that the market, however, is expected to bounce back with 7.0% growth in 2021 with expected recovery from COVID-19. Consequently, the card payments market is forecasted to reach IDR887.5 trillion (US$63.9bn) in 2024.

Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “The uncertainty caused by the COVID-19 pandemic has significantly affected consumers’ buying capacity, forcing them to cut-down on non-essential purchases, which is in turn affecting the card payments growth.”

Following a surge in COVID-19 cases, Indonesia declared state of emergency on 31 March 2020. The large-scale social restrictions imposed across several regions resulted in the closure of businesses and brought to complete halt domestic and international travel.

To provide relief to cardholders and push card usage, the government has reduced credit card interest rates from 2.25% to 2% per month and minimum repayment from 10% to 5% of total outstanding, effective from 1 May 2020.

With the gradual easing of travel and social distancing restrictions, the country is getting into ‘new normal’. While international travel is still restricted, domestic travel restriction has been lifted.

Mr Reddy concludes: “After months of sluggish economic growth because of COVID-19 pandemic, Indonesia is now gearing up for a return to normalcy. The resurgence of tourism industry and opening up of business activities will encourage consumer spending, which in turn will accelerate the recovery of the country’s card payments market.”