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Thailand and Indonesia spur electronic money use in SEA

By Debabrata Das

01:48, 23 December 2021

A customer making payment using e-money at an Indonesian store
A customer making payment through e-money at an Indonesian store – Photo: Shutterstock

Low transaction costs, rapid expansion of the digital economy and a large portion of unbanked population in Indonesia has led to Thailand and Indonesia leading the Association of Southeast Asian Nations (ASEAN) region in terms of growth in the use of electronic money.

Latest research from ASEAN+3 Macroeconomic Research Office found that though bank-issued credit and debit cards still dominate the value of electronic transactions, in terms of the number of transactions, e-money has surged past credit and debit cards with a 72% share in Thailand and an 83% share in Indonesia.

According to the research, Covid-19 has boosted the popularity of e-money, to the detriment of bank-issued cards. By e-money, the paper refers to AliPay, WePay, M-Pesa, Paxos, USD Coin and TrueUSD.

E-money could hurt money supply

The paper, authored by Jade Vichyanond, found some significant risks as well with the widespread adoption of e-money.

“If the funds received by e-money issuers is legally mandated to be put into accounts at commercial banks for the purpose of backing e-money balances, then such funds are no longer in circulation and thus cease to be part of the money supply,” the paper stated.


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“As far as e-money’s implications on monetary policy are concerned, there is a potential that it may increase the velocity of money. Compared to conventional forms of money such as cash or bank deposits, the velocity of e-money may be higher to the extent that e-money transactions are easier to facilitate. As e-money is increasingly becoming a common method of payment, the average velocity of the ‘effective’ monetary aggregate can be expected to rise accordingly and potentially become more volatile,” the paper added.

Customer data offers revenue opportunities

Yet, despite the risks the paper also sees a significant business opportunity for e-money issuers, provided customer data is allowed to be monetised.

While Vichyanond notes that regulatory frameworks are quite strict, going forward customer data for commercial purposes will be main revenue generator for e-money issuers.

“In particular, considerable potential lies in the use of customer data for e-money issuers’ other activities, such as the selling of financial products (such as insurance and investment products) through the existing platform and peer-to-peer (P2P) lending,” the paper stated.

Read more: Digital economy in Southeast Asia to reach Read more: Digital economy in Southeast Asia to reach $1trn by 2030trn by 2030

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