Will Doku save us from PayPal's ridiculous exchange rate?
Doku, an Indonesian credit card processing startup formerly known as NsiaPay, is launching a new product today to bring online payment to not only online merchants but all merchants across the archipelago.
For years many Indonesians have been using PayPal to conduct transactions over the internet especially freelancers who often have overseas clients as it's the easiest and most accessible payment method across borders even though its customer service can be very difficult to deal with. Unfortunately, the exchange rate used by PayPal is detrimental to users outside of the United States who require to withdraw funds to their bank accounts as it is often set far below the rates set by local banks.
For transactions with overseas clients or institutions, PayPal has become the de facto payment method but for local transactions, PayPal, while practical, is far from being the best choice. Most local electronic transactions are done through bank transfer via internet banking, mobile banking or through ATMs. Unfortunately due to the refusal of Bank Mandiri and BCA, two of the biggest banks in the country, to allow online transactions between their accounts, these methods fail.
I'm not privy to what is going to be launched today at Hotel Mulia in Jakarta in just over one hour but I'm hoping that this will either solve the payment process for internet transactions among Indonesians residing within the country or a major step towards attaining that practicality.
Electronic commerce is an important driver for the economy and its increase of usage signifies not a shift but the addition of an important layer of financial transactions. While there are anywhere between 25 to 40 million Indonesians online, those who conduct transactions directly on the internet is far below that number. One of the largest barriers to this is lack of trust between the seller and the buyer, or the payor and the payee. Having an agent like Doku provides that level of trust.
With the rise of online marketplaces such as plasa.com, Multiply – which is having its own launch event today – Rakuten, as well as other online stores, direct online transaction is quickly becoming a need among netizens.
Indeed, Doku isn't the only one operating in this space. We are already seeing intermediaries being adopted by a number of online properties to facilitate online transaction. KasPay is one such example from Kaskus Networks and KompasGramedia group is also working on such venture called Midazz, aiming to be launched later this month.
Ultimately, I don't think people will sign up to as many intermediaries as possible and down the road, things may end up where we are today with intermediaries refusing to recognize funds from one another. On the other hand, these payment initiatives may have better sense than the banks and work together to ensure smooth transactions across the board.
What's clear however, is that there is a demand and a need for a local intermediary for online transaction. Whichever has the better or more openly accessible model, and which will eventually be the popular choice, are subjects of another discussion. For now, let's enjoy the fact that Indonesia's online commerce space is gaining massive traction and the days of manual or tedious payment processes could be behind us before we know it.