Ayoconnect Launches Automated Recurring Direct Debit with Seven of Indonesia’s Biggest Banks
JAKARTA, 1 August 2022 — Ayoconnect, the largest licensed open finance platform in Southeast Asia, has recently launched an open finance API that provides Indonesian companies (including non-banking financial institutions like insurance and lending companies) with recurring capabilities that can instantly debit from customers' bank accounts across multiple banks in real time. The API can be integrated with minimum effort, so businesses can save on the considerable time and effort involved in negotiating terms, signing-up, and integrating with one bank at a time.
For the first phase of the roll out, Ayoconnect is working with seven of Indonesia’s largest banks to introduce direct debit, which can be accessed via one API through online banking or other available methods. Partner banks include Bank BRI, Mandiri, BNI, CIMB Niaga, Danamon, Bank Syariah Indonesia and Bank Neo Commerce. Together, these institutions provide over 50 per cent of all bank accounts in the world’s fourth largest economy by population. Phase two will include BCA, Permata, Bank Jago and NOBU Bank among others.
Despite already being a commonplace practice in other countries, direct debit is still a relatively new concept in Indonesia, let alone open banking direct debit. Ayoconnect’s Bank of Indonesia license - received just last month - will reassure users that the technology is properly regulated to protect customers. As a payment initiation service provider, this license is a testament to the quality of our infrastructure and processes. We are also currently the only open finance player in the country to be awarded with the certification.
The first businesses making use of Ayoconnect’s new direct debit API include digital healthcare provider Milvik Indonesia, investment app GoTrade, as well as a leading digital bank credit platform. All three will use the API to initiate recurring monthly payments for their customers. GoTrade will also make use of the API’s automatic top-up feature - the first Indonesian business to offer this functionality to their customers.
Recurring payment systems make direct debit payments much more convenient for consumers and merchants. Previously, Indonesian non-bank financial institutions and large companies had to rely on single payment digital initiation for collection purposes. Using this method, businesses usually have to initiate separate payments for each transaction, even for standard outgoings like monthly subscription services and loan repayments. For consumers, non-automated payments could involve inconvenient monthly trips for bank transfers or other in-person transactions. Other human errors could also occur during this financial inclusion process, including inputting the wrong payment amount and so forth.
Furthermore, the single initiated payment mechanism is only possible through relatively high-cost payment providers like credit card companies. However, only 6 percent of the Indonesian population is capable of making credit card payments, while nearly 65% are still unbanked. Asides from this, by law, lending companies are unable to collect funds using this method, therefore further narrowing the user base.
Jakob Rost, CEO and co-founder at Ayoconnect, says: “Ayoconnect’s recurring direct debit will be a gamechanger for Indonesian businesses and their consumers. By automating recurring direct debit, businesses are in full control of their collections, with the ability to reduce costs and make payment fees more affordable for consumers.”
Wisnu Dharmawan, President Director - PT Milvik Indonesia, adds, “MILVIK is very excited to partner with Ayoconnect because the service will be able to address our requirements to offer reliable payment options for our subscription-based digital health products.”
Not only does it add unnecessary time for both parties, manual settlement also increases the likelihood of late payments and associated penalty fees. Manually sending advance notice of payments is also an added workload to fintech lending institutions as well, considering it does not guarantee payments from borrowers. Lenders in Indonesia, for example, typically experience loan default rates of about three per cent.
For any business relying on regular payments - be it large utilities, insurers, subscription streaming services, magazine subscription providers, gyms, telco and broadband companies - the ability to set up automatic, fully paperless recurring payments offers multiple benefits. It shortens the time needed to collect funds, reduces the cost of collections and decreases late payments and defaults.
Ayoconnect's direct debit guarantees businesses of any size, including startups and SMEs, to be able to initiate both regular variable recurring payments and single payments from any customers who has provided consent. We provide recurring card payments and open banking payments as well, as we're a firm believer towards the potential of open banking and open finance in Indonesia and Southeast Asia.
Lastly, recurring direct debit also opens up the opportunity for Indonesian entrepreneurs to launch rapid-growth lending services, including buy now pay later (BNPL), backed by automated monthly collections.
Jakob Rost, CEO and co-founder at Ayoconnect, concludes: “We’re already seeing strong interest from larger companies, such as insurers and lenders, which rely on prompt, regular payments to maintain services and control costs. We also believe recurring direct debit will open up exciting new business opportunities for innovative services, such as buy now pay later.”
Founded in 2016, Ayoconnect is Southeast Asia’s largest Open Finance API platform. The company is building full stack solutions with the mission to power the leading companies of today and tech unicorns of tomorrow.
Its powerful embedded finance and data solutions help companies of all sizes to move forward quickly and launch banking and payment services within just a few weeks.
Ayoconnect’s tech solutions are trusted by more than 200 clients, including leading financial institutions and tech companies such as Bank BRI, Bank Mandiri, DANA and Bukalapak.
Headquartered in Jakarta, Indonesia, the company is backed by some of the world’s most respected VC firms including Tiger Global, PayU and Alto Partners.
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