Electronic Money Transactions Increase by 9 Percent in April 2023, Cash Becoming Less Popular?

Electronic Money (E-Money)

The rapid progress of technology and the widespread adoption of digitalization in various sectors are reshaping the financial landscape in Indonesia. Particularly, the use of traditional paper currency is experiencing a decline, as the country embraces the convenience and efficiency of digital transactions. Bank Indonesia (BI), the central bank of Indonesia, has observed a noteworthy increase in electronic money transactions, indicating a shift towards a more digitized economy.

According to the latest data provided by BI, electronic money transactions have witnessed a remarkable annual growth rate. In April 2023 alone, electronic money transactions surged by 9 percent compared to the previous year, reaching an impressive Rp37.4 trillion.

This surge can be attributed to the continuous efforts to ensure a secure, seamless, and reliable payment system, as emphasized by BI’s Governor during the recent Board of Governors Meeting (RDG) held on Thursday (May 25, 2023).

In contrast to the growth in electronic money transactions, the value of payments made using traditional methods such as ATM cards, debit cards, and credit cards experienced a decline of 3.42 percent YoY, amounting to Rp738.3 trillion in April 2023. However, digital banking transactions showcased a robust performance, reaching an impressive Rp4,265 trillion during the same period.

Recognizing the sustained growth in electronic money transactions, BI’s Deputy Governor, Juda Agung, highlighted that this trend is expected to continue. This growth can be attributed to several factors, including the expansion of features and the increasing number of merchants accepting electronic payments.

Juda Agung further emphasized the dominance of online payment transactions, which accounted for approximately 80 percent of the overall market share.

Moreover, the usage of e-money for transfers has also experienced a notable upsurge. This upward trajectory can be attributed to the availability of free transfer services provided by electronic money providers, which has incentivized individuals to utilize electronic money for their financial transactions.

Looking ahead, BI has projected that electronic money transactions will further accelerate, reaching a projected value of Rp495 trillion throughout 2023. This represents a substantial YoY increase of 23.9 percent, highlighting the growing reliance on digital payment methods in Indonesia.

It is worth noting that the remarkable growth of electronic money transactions has been witnessed over the past several years, with a compounded annual growth rate (CAGR) of 96 percent from 2016 to 2022.

In 2022 alone, the total value of e-money transactions reached Rp399 trillion, underscoring the ongoing transformation in the financial landscape of Indonesia towards a more digitalized and technologically-driven economy.