In one emerging country - Indonesia - e-money is on track to hit 75 million users in the next three years.
The trend
In the future, the only wallet we may carry in our pocket will be a vintage accessory. Countless signs presage the advent of a cashless society, where banknotes will be replaced by e-money, or electronic cash, even for small transactions; and we’ll be making our purchases with pre-paid cards or directly with an e-wallet that we can access with our smartphones.Corroborating this trend is the Ipsos Marketing Summit report entitled: Indonesia. The Next Cashless Society. The study focuses on the case of an emerging country, Indonesia, which is set to become the fourth economy in the world by 2050. In fact, in Indonesia e-money is seeing stunning growth, with over 43 million people ‘carrying’ e-wallets in 2019, a number forecasted to surge to over 75 million by 2023. In less than a year, from the end of 2018 to November 2019, the country saw an escalation of 61% in the volume of e-money transactions, equaling as much as 172% in value.
The most popular non-cash payment tool is the e-wallet, which is used by 95% of Indonesians aged 18 to 50 interviewed by Ipsos. Next come pre-paid cards, which can be found in the wallets of 56% of the interviewees. But anyone wanting to break into this market should realize that users of e-wallets apps do not seem to demonstrate any particular brand loyalty: nearly half (47%) use three or more apps of this kind. Pre-paid card customers, on the other hand, seem to be more loyal with 47% of users having only one.
Key takeaways
But what are the perceived advantages of e-money? Number one is security: using e-money is more practical and more safe, because when you don’t need to carry cash, being robbed or losing your wallet is less of a risk. In fact, 26% of Indonesian e-money users interviewed by Ipsos cited this motivation. That leaves us to wonder if, in the era of Covid-19 and social distancing, the perception of security associated with e-money might not take on other connotations as well, fueling its success even more. E-money is also associated with the perception of an easier way to manage and control personal spending. This aspect is the main driver for the use of electronic money for 19% of interviewees.
But it’s not only a question of practicality and security - e-money can even become a source of pleasure. For 25% of the interviewees, the primary motivation for paying with electronic money lies in the fact that the experience is enjoyable, fun, and enriching as compared to using cash. What’s more, e-money apps seem to be able to create an emotional connection with users: 9% of interviewees say that they see e-money as a partner, an ally in their daily life.
Along with these considerations, the technological component, in its various iterations, also represents an essential driver. The possibility of playing an active role in developing new technologies and payment tools provides added value for 11% of users. And an additional 10% consider it particularly gratifying to be among the early adopters of this innovative payment tool, pioneers leading the way to the cashless society of the future.
Questions
Is e-money really going to replace cash? What role will e-money play in the larger system of payment tools?
E-money is rapidly growing in popularity in Indonesia, an emerging market with a young population. What can we reasonably expect to happen in a country like Italy?
Could the Covid-19 pandemic represent an incentive for the adoption of e-money apps? Generally speaking, what impact is e-money having on the world of payment tools?
