Micro and Small Enterprises (MSEs) in Indonesia make up much of the nation’s economic and employment activity. MSEs constitute 98% of all businesses and provide 94% of employment. To explore the market potential of this ‘unbanked’ segment, Spire Research and Consulting conducted a study to evaluate potential demand for Mobile Money and Branchless Banking services (MM & BB). The findings of the study were published in a report released by TNP2K, a public-private coalition of Indonesian and international agencies working towards poverty reduction.
Spire’s study was conducted across four provinces, namely Bali, South Sulawesi, West Java and South Sumatra. 400 survey interviews with MSE owners and 16 Focus group discussions were conducted in August and September 2013.
The findings revealed that MSEs can potentially make use of a number of MM & BB services wherein neither the gender nor the province of the MSE owner would be a hindrance. This is due to the fact that women form a more viable market for MM and BB services because of their more fastidious approach to managing money. Many have also integrated the use of mobile phones into their business, which makes the transition to mobile money easier. However, there may be differences in market opportunities based on the size of bank transactions and level of usage common across different types of MSEs.
The report found that about 85% of respondents have cash remaining after paying businesses and household expenses, showing the potential for short-term savings accounts for MSEs to deposit spare cash. Such accounts could then be used to make for large business-to-business transactions and payments to employees using MM and BB services.
On the other hand, the challenges for MM and BB service providers cannot be overlooked. Most MSEs travel short distances to make purchases from suppliers, which makes physical payments attractive. Some also fear labor regulation implications if online records of employee payments become visible.
In the final analysis, the Spire study revealed that an enabling regulatory environment is needed for MM and BB services to MSEs to take off. At the same time, electronic payments should be promoted for government employee salary payments, taxation and mandatory insurance schemes.
https://www.spireresearch.com/newsroom/media/indonesia-demand-for-branchless-and-mobile-banking-services-emerges-among-mses/
https://www.spireresearch.com/newsroom/media/indonesia-demand-for-branchless-and-mobile-banking-services-emerges-among-mses/
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