Indonesian e-commerce marketplace company Tokopedia has launched its own financing tool TokoSwipe in beta, making it the latest online platform to double down on instalments as a mode of payment, according to Tech in Asia on Monday.
Made available to a fraction of its mobile app users, the new feature lets users buy goods on Tokopedia on credit, and pay a minimum of 10% every month or via zero-interest instalments. There is a minimum transaction amount of 10,000 rupiah (around US$0.67).
Tokopedia had previously formed a partnership with digital credit card service Kredivo to offer its users the ability to pay for goods via instalments (interest free for those who pay the full price within 30 days, and with interest for those who opt for longer payment plans). Kredivo is still available as a payment option on Tokopedia. Launched by FinAccel, the service recently raised US$30 million in a Series B round to push credit payments forward in the Southeast Asian country. It is unclear if this partnership would be affected once TokoSwipe officially rolls out. KrAsia has reached out to Kredivo and Tokopedia for comment.
For many Indonesians who do not currently own credit cards — up to 96% of the population — they will now be able to buy goods that they previously could not afford to pay for in one shot up front. Other companies that have started targeting this market include Indonesian O2O firm Go-Jek, which recently launched PayLater, an instalment payment feature developed by one of the startups it acquired. Until further notice, PayLater is only made available for a batch of Go-Food (food delivery) customers.
In China, debt has been integral to the success of e-commerce giants like Alibaba and JD.com. Alibaba, through Alipay, the e-wallet feature owned by its fintech affiliate Ant Financial, has used financing plans to get more people to spend on its platform. It has a microlending feature called Huabei that’s popular especially during its annual November 11 Singles Day spree.
A report (in Chinese) says 38% of Huabei users chose the ’12 month instalment’ option, followed by 33% of users choosing the ‘three month instalment’ option. JD.com, on the other hand, has its consumer credit feature Baitiao, which was launched in 2014.
Credit card ownership in China, like Indonesia, has traditionally been low; according to a research firm in 2015, only 9% of all China’s UnionPay cards are credit cards, while the rest are debit cards. As alternative credit options become more popular in China and countries like Indonesia, people might leapfrog the concept of traditional credit cards altogether, and opt for loans and credit instead.
Tokopedia is one of Indonesia’s most prominent e-commerce companies, having received US$1.1 billion in a funding round led by Alibaba. Founded nine years ago, it claims to have onboarded four million merchants.
Editor: Nadine Freischlad