In the increasingly advanced digital era, cashless transactions have become an integral part of daily life. The convenience, speed, and security offered by this method have made it increasingly popular.
From e-wallets to QRIS, various innovations continue to develop to support a practical lifestyle. So, how is the development of cashless systems in Indonesia, and what are its benefits? Read on for the discussion in this article!
What is Cashless Payment?
Cashless payment refers to financial transactions that no longer rely on physical cash. Instead, payments are made digitally using debit cards, credit cards, e-wallets, or bank transfers. With advancements in technology and the wider availability of internet-based financial services, this method has become increasingly popular across various demographics.
The main advantage of cashless systems is convenience and practicality. Without the need to carry large amounts of cash, transactions can be completed with just a few taps on a digital device. Additionally, flexibility is a major plus, as payments can be made anytime and anywhere as long as there is internet access.
Therefore, the popularity of cashless transactions continues to rise in Indonesia, supported by the government and the private sector, which are actively expanding infrastructure and providing various incentives for users.
History of Cashless Transactions in Indonesia
The development of cashless payment systems in Indonesia has been evolving alongside technological advancements and government policies. Since the launch of the National Non-Cash Movement (GNNT) in 2014, various initiatives such as the Government Credit Card (KKP), Virtual Accounts (VA), and Digipay have been implemented.
In 2022, the government introduced domestic KKP and QRIS to further digitalize transactions. With the support of Presidential Instruction No. 2 of 2022, procurement systems have shifted to electronic platforms. Innovations like blockchain and digital banking have accelerated, secured, and streamlined cashless transactions in Indonesia.
Also Read: Cash Out: Definition, Benefits, and How to Make a Cash Out
Factors Behind the Emergence of Cashless Payment
Cashless payment systems emerged due to several factors, such as technological advancements, awareness of fraud and crime, the public's demand for convenience and speed, the need for security, and behavioral changes due to the Covid-19 pandemic. These factors are what sparked the rise of the cashless payment system.
Advantages of Cashless Payment
- Practical and efficient: There's no need to carry physical cash; just use a card, e-wallet, or payment app to make transactions.
- Faster transactions: Payments can be completed in seconds without needing to count change.
- Increased security: There's a reduced risk of losing or having cash stolen, and security features like PINs and verifications are available.
- Easier to track: All transactions are digitally recorded, making financial management and record-keeping easier.
- Rewards and discounts: Many cashless service providers offer discounts, cashback, or reward points for users.
- Minimal physical contact: Payments are more hygienic, especially after the pandemic, as there is no need to handle cash.
Disadvantages of Cashless Payment
- Dependence on technology: Cashless payments require devices such as smartphones or cards, as well as stable internet access.
- Vulnerable to digital crimes: Risks such as hacking, data theft, and skimming remain significant threats.
- Limited acceptance: Not all locations accept cashless payments, as some small shops or remote areas still rely on cash transactions.
- Additional fees: Some services may charge administrative fees or deductions during transactions.
- Potential for overspending: Without physical cash, it’s easier to spend money without realizing it.
What is Included in Cashless Payment?
Cashless payment systems include various methods that enable cashless transactions. Here are some of them:
- Debit and Credit Cards: Used for payments in stores, restaurants, or online transactions via EDC machines or digital platforms.
- Digital Wallets (E-Wallets): Apps like GoPay, OVO, Dana, ShopeePay, and LinkAja that allow payments through smartphones.
- QR Code (QRIS): A payment system using a QR code scan, which is practical and can be used at various merchants.
- Virtual Account: Special account numbers used for bill payments or digital transactions without manual confirmation.
- Bank Transfers & Mobile Banking: Cashless transactions via mobile banking apps or internet banking for payments, top-ups, and transfers.
- E-Money & Tap Cards: Cards like e-Money, Brizzi, Flazz, and TapCash used for public transportation payments, tolls, and transactions at convenience stores.
- Cryptocurrency & Digital Payment Platforms: Cryptocurrencies like Bitcoin, Ethereum, and other digital assets used in specific digital transaction ecosystems.
Also Read: Intangible Assets: Definition, Types, and Importance in Business
Examples of Cashless Payment
Now that we know about various types of cashless payments, let’s understand how to use them in everyday activities. This method makes transactions more practical and efficient. Here are some examples of how to use cashless payments:
1. Shopping on Online Marketplaces
Shopping online has never been easier, without the need to go to an ATM to make manual transfers. With e-money and e-wallets like GoPay, OVO, Dana, and ShopeePay, payments can be made directly through the app on your smartphone. Simply select the digital payment method during checkout, and the transaction is completed in seconds! Not only is this more practical, but it also often offers attractive promotions such as cashback and additional discounts.
2. Shopping in Physical Stores and Street Vendors
Digital payments are not only limited to online transactions but can also be used when shopping in physical stores, convenience stores, or even street vendors that support cashless payments. With QRIS, debit/credit cards, or digital wallets, you can pay by simply scanning a QR code or tapping your card on an EDC machine. Another benefit is that you don’t have to worry about carrying cash or waiting for change, making transactions quicker and more convenient.
3. Public Transportation and Toll Payments
The cashless method also helps with public transportation payments. From online motorcycle taxis, taxis, to bus, KRL, MRT, and LRT tickets, all can be paid using e-money or e-wallets. Even for private car travel, toll payments are now more practical with e-money cards such as e-Money Mandiri, Brizzi, Flazz, or TapCash. With this system, toll booth queues are reduced, making the journey more efficient.
Benefits of Cashless Payments
The main reason people switch to cashless payments is due to safety and efficiency. Besides that, there are several other benefits to using cashless methods:
1. Transactions Can Be Done Anytime and Anywhere
With cashless payment methods, there’s no need to go to a bank or ATM just to make a transaction. No more long queues when paying utility bills, internet, or insurance.
Simply access your e-wallet app, and you can complete payments in seconds. This flexibility allows you to transact anytime, anywhere—whether at work, chatting with friends, or even while on the move.
2. Easier Financial Management
Digital payments not only simplify transactions but also help you become more mindful of your spending. With e-money or e-wallets, you can load funds according to your needs, making it easier to control expenses. Additionally, all transactions are recorded in the app’s history, making financial tracking more transparent and organized.
3. More Practical and Efficient
No need to carry large amounts of cash in your wallet. With an electronic card or e-wallet app, all transactions can be completed with a tap or QR code scan. In addition to reducing hassle, digital payments are much faster compared to cash transactions, which require counting money and waiting for change.
4. Reduces Crime Risks
Carrying large amounts of cash increases the risk of theft or robbery. With cashless payment systems, you only need to carry an e-money card or use an app on your phone, so your security is better protected.
Moreover, digital payment security systems are becoming more advanced with PIN protection, OTP codes, and features to block cards or accounts if suspicious activity occurs. With these measures, your balance remains secure even in the event of loss or theft.
5. Many Attractive Promotions and Discounts
The rapid growth of e-commerce and marketplaces benefits users of digital payments. Many merchants offer attractive promotions, such as discounts, cashback, or reward points for customers who transact using e-wallets. These promotions are not only available in marketplaces but also for transport tickets, hotel accommodations, and tourist attractions.
With these various benefits, it’s no wonder that more and more people are turning to cashless payment systems as a more practical, safe, and beneficial transaction solution.
As digital payment methods continue to evolve, transactions have become safer, easier, and faster. Don’t miss out on the convenience of using cashless payment systems for a more practical and efficient transaction experience.
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