OVO, a digital payment service backed by diversified conglomerate Lippo Group, is leading the market in Indonesia. (B1 Photo/Mohammad Defrizal)
OVO Dominates Digital Payment Market in Indonesia: Study
JULY 16, 2019
Jakarta. OVO, backed by diversified conglomerate Lippo Group, is now the leading digital payment service in Indonesia, with more than half of everyday users preferring it over similar apps thanks to its prominence among retailers, transportation companies, e-commerce platforms and bill payment services, a recent study from digital research firm Snapcart showed.
This has put the company in the driving seat to dominate a market that, according to a separate study from global investment bank Morgan Stanley, would process around $50 billion in digital transactions in 2027, up from $3.4 billion last year.
The study, which involved 1,800 respondents across six major cities in Indonesia in May, showed that 58 percent of them answered OVO as their favorite digital payment application.
Trailing far behind were other application-based digital wallets such as Go-Jek Indonesia's Go-Pay (23 percent), Emtek Group's and Ant Financial's DANA (6 percent) and state-controlled lenders' LinkAja (1 percent).
The remaining 12 percent of respondents preferred other card-based cashless payment services issued by banks, such as Bank Central Asia's Flazz, Bank Rakyat Indonesia's Brizzi and Bank Mandiri's E-money.
The study also found that the respondents used electronic money most often for retail transactions (28 percent), booking transportation online (27 percent) and ordering food online (20 percent).
E-money is also commonly used in e-commerce transactions (15 percent) and for paying bills (7 percent).
"The data showed that using electronic money in daily transactions for transportation, fast food delivery and shopping has become increasingly popular among Indonesian consumers. They enjoy the transaction experience since it's more practical, fast, safe and less complicated. You don't have to fumble around for change," said Eko Wicaksono, Snapcart Indonesia's country sales and operation officer.
While digital money earned its early popularity for being used on public transportation and online riding services, it was its acceptance by retailers in shopping centers and malls that has really driven its growth upward.
The Snapcart study showed OVO in the lead in the retail transaction segment with 63 percent of respondents saying they prefer it over other digital payment services to make purchases. Go-Pay was far behind (28 percent), followed by DANA (7 percent) and LinkAja (1 percent).
Today, OVO claims its payment service is accepted at 500,000 merchants, while Go-Pay says it is available at 300,000 merchants. LinkAja recently claimed its availability at 130,000 merchants, while DANA is available at more than 13,000 merchants.
OVO is also dominant in the online ride service and online food delivery transaction segments, the Snapcart data showed.
The digital wallet service for Grab (for online transportation) and GrabFood (for online food delivery) is used by 71 percent of respondents. The rest, 29 percent, choose to use Go-Pay for Go-Jek and Go-Food transactions.
LinkAja, which just joined the Go-Jek platform last week, and DANA did not have any presence in the transportation and food delivery service segments at the time of the study.
OVO also emerged as the leader in the e-commerce transaction payment segment.
Snapcart's data showed 70 percent of respondents use OVO for payment of e-commerce transactions, while 18 percent use Go-Pay and 11 percent use DANA.
OVO struck a deal with one of Indonesia largest e-commerce platforms, Tokopedia, in October last year to replace its proprietary digital payment Tokocash that experienced difficulties clearing regulatory requirements.
OVO is also the payment service of choice at e-commerce platforms Ruparupa and Sociolla. Meanwhile, Go-Pay is accepted, among others, at JD.id and Sayurbox, while DANA can be used with Bukalapak.
In the bill payment segment, OVO again led with the highest usage rate. The Snapcart study showed 67 percent of respondents use OVO for paying electricity, water, insurance, tax and other regular bills. Go-Pay again trailed far behind (22 percent), followed by DANA (10 percent) and LinkAja (2 percent).
The Jakarta Globe and OVO are both affiliated with the Lippo Group.