Fraud Blocker
Why Banks Should Launch Virtual Cards in Indonesia 2023

Why Banks Should Launch Virtual Cards in Indonesia 2023

March 17, 2023

In the wake of the pandemic, cashless payments have been increasingly adopted across Southeast Asia (SEA), as governments and businesses seek to minimize physical contact and reduce the risk of spreading the virus. With the rise of digital payments, consumers have been quick to adapt to new modes of transactions, with many opting for mobile payments, e-wallets, and online banking.

According to the Consumer Payment Attitudes Study 2022 by Visa, 93% of Southeast Asian consumers have been using cashless payment methods, led by consumers from Singapore at 97%, Malaysia at 96%, and Indonesia at 93%. The most popular digital payments being used include card payments for online payments at 57%, mobile wallets at 52%, card payments by swipe/insert at 47%, and contactless cards (credit or debit card) at 44%.  

How Virtual Cards are Getting Popular

In addition to the contactless payment method mentioned above, virtual cards or virtual debit card are gaining popularity in the region. For example, in Singapore, major banks such as HSBC, DBS, and UOB have even launched their own virtual card products. Unlike contactless cards that require physical cards to be tapped on an EDC machine using NFC technology, virtual cards do not require any physical counterpart. They can be accessed easily via a smartphone app or a website and the card can be used for both online and offline transactions.

Although virtual cards are still in the early stages of adoption in Indonesia, this alternative cashless payment method has the potential for significant growth in the years ahead. As such, banks in Indonesia should consider offering virtual cards to their customers for the following reasons:

You might also be interested in:

1. A Smartphone-Savvy Society

The majority of the Indonesian population are comfortable with and accustomed to using mobile apps in their daily lives. According to's State of Mobile 2022 report, financial apps are particularly popular, with finance app downloads surpassing 382 million in 2021, a 185% increase since 2018. The most downloaded apps in this category are the digital wallet app DANA, Bank Neo Commerce's (BNC) super-app Neo: BNC bank, and Bank BRI's super-app, BRImo.

Given the readiness of Indonesian consumers to use smartphones and the current trend of shifting towards mobile apps for financial activities, banks have a significant opportunity for future growth if they choose to launch virtual cards through an app and cater to this significant segment of the population.

2. Making Online Purchases are Now a Norm

The COVID-19 pandemic has accelerated the adoption of online transactions in the country, especially through e-commerce platforms. The e-commerce industry in Indonesia has experienced substantial growth in recent years. As per the Digital 2021 report by We Are Social and Hootsuite, 88.1% of internet users in the country have utilized e-commerce platforms to shop online and make purchases in the last few months. This figure is the highest across the globe. Simultaneously, the e-commerce industry in Indonesia is also the ninth largest in the world, with a valuation of US$43 billion recorded during the same period.

Even as the social lockdowns slow down, this trend of using online payments to purchase goods and services online is expected to continue as consumers become more comfortable with them. Asides from other existing digital payment methods, virtual cards provide a secure and convenient payment option for consumers, especially those looking to purchase goods online from international platforms like Amazon. This is because customers are fully equipped with their own card information, such as a 16-digit card number, CVC, and expiration date, which can be used like a normal credit or debit card. They are also encrypted with various forms of security like Two-Factor Authentication, reducing the risk of fraud.

3. Substantial Unbanked and Underbanked Population

This nation of islands has a significant portion of its population categorized as unserved by or lacks access to traditional banking services. The unbanked population stands at 92 million adults, while 47 million adults fall under the underbanked category. These individuals encounter difficulties in accessing traditional banking services, especially when trying to secure loans for their personal or business needs.

By offering virtual cards, banks can provide alternative financing solutions and extend loans to individuals who lack a traditional bank account. Borrowers can use these virtual cards for one-time or installment payments at the point of sale, similar to regular cards. In addition, virtual cards can offer a cashless payment option that is easily accessible to consumers, enabling them to participate in the digital economy. This can help banks to reach a more specific consumer group that was previously out of reach.

4. Favourable Tech Scene that Promotes Collaboration Between Fintech and Banks

The country boasts a thriving collaborative economy for fintech, with regulatory bodies like Bank Indonesia and OJK constantly encouraging traditional financial institutions to partner with fintech companies for innovation and growth. Several banks have tapped into the digital financial services ecosystem, leveraging the expertise of fintech companies to create new or improved products and services including to launch their own virtual cards.

For instance, GoTo Financial collaborated with Bank Jago to open up Bank Jago’s services for its financial business partners. Similarly, Bank Mandiri and Ayoconnect have collaborated to integrate over 300 digital products from more than 1,000 billing companies into the bank’s super-app, Livin'.

2023: The Perfect Time to Offer Virtual Cards!  

With the current positive environment for collaboration, banks and companies in Indonesia can leverage the expertise of fintech firms to launch their own virtual cards. If your bank or company is seeking a reliable fintech partner to launch your virtual card, look no further! Ayoconnect has earned the trust of over 200 banks, fintech companies, and startups across Southeast Asia to power their open finance solutions. Our team is committed to efficiently customizing virtual cards to meet your business needs, and we are confident that we can help elevate the services that your bank and company provide to your customers to the next level.

Ready to #MoveForward with us? Contact us for more information here!