The Indonesian card payments market will grow by 39.6% to reach IDR801.2  trillion ($56.3 billion) in 2022, supported by a rise in consumer spending driven by improving economic conditions, and a growing preference for electronic payments, forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Payment Cards Analytics, the card payments market in Indonesia rebounded in 2021 registering a 11.1% growth, after declining by 22.4% in 2020. Like most other markets globally, Indonesia was also affected by the COVID-19 pandemic, leading to a decrease in consumer spending which, in turn, negatively impacted the country’s card payments market.

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “Indonesia, which is primarily a cash-driven economy, made robust progress in the adoption of card payments in the last few years due to various supportive initiatives from the government and the central bank, increase in banked population, raising consumer awareness, and growing merchant acceptance.”

To encourage payments through credit cards, the Indonesian central bank embarked on a phased reduction of interest rate on credit card usage, bringing it down from 2.25% in June 2017 to 1.75% in July 2021.

The government also passed a regulation in 2019 to increase government spending via non-cash payment methods. The regulation stipulates all working units of ministries to use credit cards to meet 40% of their office expenses such as office supplies, rent, inventories, maintenance, and travel. The government collaborated with various banks including Bank Mandiri, BNI, Bank BRI, and BTN to issue these cards.

To enhance the security of the country’s payment system and boost payment card usage, the central bank also mandated that all ATM and debit cards to be migrated to the EMV standard with a six-digit PIN by 31 December 2021.

Sharma concludes: “The Indonesian payments card market is back on a growth trajectory supported by improving payments infrastructure and the government initiatives. The card payments value is forecast to register a compound annual growth rate (CAGR) of 15.0% to reach IDR1,399.1 trillion ($98.3 billion) in 2026.”