Online Payment Platforms Help SMEs Go Digital
With the rapidly increasing adoption of a cashless system, McKinsey’s management consulting firm said that online payment platforms would help small and medium enterprises (SMEs) go digital.
In the 2020 McKinsey Global Payments Report, the cash usage across the world had declined by as much as 45 percent in 10 months. This phenomenon causes more customers to be more relying on digital platforms to send overpayments.
The same was observed by the digital payment service Youtap Indonesia. It shared that its digital transactions grew by 4.5 times from June to September. In the same period, the number of users grew fivefold.
Indonesia Preparing to Go Cashless
According to company data, the majority or 57 percent of the cashless payments were from street stalls, restaurants, and other food businesses. This is followed by small kiosks (20 percent), traditional markets (8 percent), and other services (7 percent).
McKinsey senior expert Reet Chaudhuri observed that many governments, including those of Indonesia and Mexico, have been implementing initiatives to help SMEs go digital.
It was only natural given the accelerated and unprecedented shift to digital as the coronavirus pandemic restricts mobility and physical interaction. The McKinsey representative said that the public would continue using a cashless payment scheme even after the restrictions become lifted.
Also, Chaudhuri said that helping the SMEs to go digital can allow them to offer value-added services, including loyalty programs, digital marketing, and payroll processing.
According to a study by Mandiri Institute, transforming the SMEs into digital can propel the Indonesian economy toward the pandemic’s recovery path.
These small businesses account for over 60 percent of Indonesia’s gross domestic products and employ a huge chunk of the labor force. In the second quarter of this year, the Indonesian economy contracted 5.32 percent year-on-year due to the pandemic.
Indeed, helping the SMEs move forward is also the same as lifting the economy from a major rut.
Initiatives to Help SMEs Go Digital
By the end of 2020, the Indonesian government is eyeing to equip 15 million merchants, including SMEs, with the Quick Response Indonesia Standard (QRIS) payment option.
At the same time, it aims to migrate 10 million small enterprises to digital platforms to adjust and remain operational amid the pandemic.
So far, the Bank Indonesia noted that around 3.6 million SMEs are now offering QRIS as a payment platform.
The central bank is also lobbying for the digital transformation of small businesses. It is developing a digital ecosystem and financing access via the SME financial management application called SI-APIK.
In an interview with The Jakarta Post, E-wallet LinkAja chief executive officer Haryati Lawidjaja explained that digital platforms could be quite beneficial for SMEs because they provide marketing and funding access.
Also, Lawidjaja stressed that bookkeeping and analytics, through these digital platforms, are imperative for SMEs to make informed business decisions.
BukuWarung Makes Financial Services Accessible for SMEs
Financial technology (fintech) startup BukuWarung has reportedly secured around $10 million to $15 million. The company is allocating this money to make financial services more accessible to small businesses and help SMEs go digital.
The fintech firm launched digital payments to address the growing demand for contactless transactions amid the coronavirus pandemic.
Since the launch, BukuWarung said it had processed several million US dollars already. Besides, it is now serving some 1.2 million merchants across 750 locations in Indonesia.
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