Jakarta. In less than a month state-owned lenders, insurers and phone operators will launch an integrated e-wallet service to give themselves a boost in a race to dominate a booming market predicted to be worth around $25 billion over the next four years. 

State-owned lenders Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia have introduced card-based e-wallet services at various times in the past decade but never reached enough market penetration or growth. 

Telekomunikasi Selular, or Telkomsel, a state-controlled mobile operator, is faring a bit better with its T-Cash service but is still blindsided by Go-Pay, the e-wallet service from Indonesia's largest ride-hailing company Go-Jek Indonesia, and Ovo, an e-wallet app backed by local conglomerate Lippo Group. 

Go-Pay has been piggybacking on the extreme popularity of its parent platform Go-Jek, now installed in more than 50 million mobile devices in Indonesia and used to order everything from motorcyle taxis, food delivery, even home massages.

Ovo has risen from relative obscurity three years ago to become a ubiquitous payment system in malls, restaurants and small retailers across Indonesia. It is also used as the official payment service for Go-Jek's rival Grab and one of Indonesia's largest e-commerce platform, Tokopedia.

So for the government it only makes sense that companies under its control join forces to beef up the chance of overtaking their more established rivals.

"Why do we have different payment systems for banks and telecommunication companies? Why don’t we merge them and make they system more efficient to reach all parts of Indonesia?" State-Owned Enterprises Minister Rini Soemarno said.

The banks and Telkomsel have been working on integrating the new service in the past few months and Rini said it will be ready next month. 

The T-Cash and the lenders' existing e-wallet services will be merged under a new brand name, LinkAja, operated by Fintek Karya Nusantara. The new company is currently processing its operational permit from the central bank, Bank Indonesia.    

Telkomsel has a 25 percent stake in Fintek Karya. Bank Mandiri, BNI and BRI each has a 20 percent stake. The rest of the company's shares are held by Bank Tabungan Negara, state energy company Pertamina and state insurer Jiwasraya.

E-wallet was a $1.5 billion business in Indonesia last year and its value will reach $25 billion by 2023, according to a recent report from Bengaluru-based research firm Redseer. "A significant chunk of the market growth will be driven by unbanked consumers," the research firm said.

In comparison, payments using bank-issued debit cards, which are linked to a bank account and still the most popular form of electronic payment in Indonesia, were worth around Rp 293 trillion ($20 billion) last year. 

Redseer said ride-hailing services account for 35 percent of e-wallet transactions today, followed by retail transactions (23 percent), bill payments or top-ups (20 percent), e-commerce (15 percent), food delivery (6 percent) and public transport (1 percent).  

These segments will grow by between 50 percent and 120 percent annually, with transactions in malls, restaurants and small retailers growing fastest. The research firm said the later segments will account for half of the $25 billion e-wallet market in 2023.