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Card management trends. Things Indonesian players need to know to stay competitive.

Kate Pelikh Dec 15, 2021 8:19:09 AM

Indonesia's financial market faces good times now, with card payments with value of transactions reaching 303 bln USD over the country and is predicted to grow by 26% to 2024. The demand for safe and transparent payments is growing as fast as it was never before. The ability to provide customised digital products fast and adapt to a new shifting marketing demand is very important for those who want to stay on the competitive edge. 

Regional trends

With bank penetration sitting around 48% in the country, Indonesia continues to improve its digital economy and card penetration. By Global Data survey research, Indonesia stays top7 when speaking about prepaid cards penetration. The prepaid cards market has reached 19bln USD in 2021 and is expected to experience a sharp rise towards 2024, almost doubling the number. The popularity of such cards lie in the digitally active young population and the development of e-commerce, thanks to the internet penetration rapid increase within few years. 

Apart from that, the Indonesian market has seen a large increase in local national GPN cards, which number reached over 47m in 2020, which also almost reached the number of transactions of international schemes long present on the market. While still being relatively low in numbers, Visa, Mastercard and GPN are the most popular schemes in the country, which should be considered by issuers as must have in their cards portfolio. 

Cards are taking up the market in Indonesia as digital payment instruments, driving cheques out and slowly replacing cash, which is still the dominant means of payment in the country. In 2021 alone, the volume of consumer and commercial usage of cards has reached 1.1 bln operations with 51bln USD volume, which is expected to increase by 22% in 3 years. While consumers' mindset is evolving towards flexible digital payments, the market is still fairly easy to take over with the right targeted supply of services. The issuer banks can secure the market, backing its proposition by the right scalable card management technology to ensure the provisioning of modern customer-centric banking experience to its customers.  


With the internet penetration is increasing as well as the share of the young generation getting ready for digital payments, most bank issuers still rely on the legacy systems, which do not cater for the modern demands expected by population such as customisable cards, instant issue capabilities, availability of CNP operations, BNPL features, dynamic CVV, gamification or peer to peer lending options, cutting of the issuer from potential end-users. The banks reluctantly think of a change, as replacement of the legacy platform without smooth integration with other modern services require high effort, costs of implementation and configuration and it could become a real challenge to replace such a system for banks without disruption of activities and suffering downtimes, which usually result in missing out on increasing the cardholders portofolio.

Benefits of moving away

Moving away from legacy platforms may seem challenging, due to uncertainty or possible migration obstacles related to insufficiency of functionality of solution, however making this step bears instant benefits to the banks, allowing to tackle latest advanced technologies and solutions developed to help banks achieve competitive edge.

  • Reduction of costs Introducing a modern modular sole platform enables utilizing newer technologies, enables seamless integration through modern protocols of JSON, ISO200220, which are now supported by various third-party providers.
  • Lower TTM. Flexibility of modern CMS solutions and lower infra costs will help reduce time to market for new products and features
  • Partnership with international schemes. Banks should look at modern CMS systems that possess high-quality standards and work in line with international payment schemes. Introducing such technology opens the opportunity to both issuer and acquirer banks working with any payment scheme and increasing the customer demand for digital products.

Some must-have capabilities of the modern Issuer

With the fast-changing environment and emergence of disruptive trends that dramatically change payments, the issuer should refer to the following criteria that would allow them to stay competitive and keep up with Indonesia trends:

  • BNPL and Microfinance. Growing BNPL market and rising number of MF companies can be a threat to traditional still too set on conventional credit cards. Having BNPL and microfinance capabilities give the issuer a competitive edge.
  • Segment-specific cards. Lending products for specific customer segments – businesses, students, ethnic communities, rather than “one size fits all credit cards”.
  • Gamification. Given the large share of the young population actively engaged in e-commerce, gamification options can provide a right engagement tool to open digital payments doors for young customers. Gamification allows the customers to become more engaged in the process, which improves the retention rate as well as allows users to earn points and redeem them for prizes, do referrals and make the whole process more entertaining.
  • Peer to peer lending. With consumers looking into more easy and convenient services, those SMEs that introduce peer to peer lending within their portfolio are to outplay its competitors. P2P lending motivates lenders to make timely payments, hence lower interest rates can be ensured.
  • Financial Marketplace. The issuer should be able to refer to other third-party lenders/credit card issuers that will offer more favorable terms and to the customer.

What should be the next steps

Indonesia's cards market is slowly evolving, given the introduction of national payment cards, as well as improvement in cards market share relative to other payment instruments. The customer-centric services and right technological back-up are essential for the bank that wants to be on the tip of the spear. Card Management solutions should help customers to enroll, instantly receive any card and experience digital at its best. The financial trends are developing towards instant payments, virtual and contactless customised cards, buy now pay later and instant lending. To be ready, banks need to have the right technological support to leverage on.

Talk to our experts in the Asia Pacific region to learn more about current local and regional CMS trends and what BPC can offer to help you keep a competitive edge.