1. E-wallets have seen a strong upsurge during the pandemic

Foodtech and e-Commerce transactions skyrocketed due to government-imposed lockdowns and movement restrictions. Cashless payments were preferred due to the social distancing norms. This drove a massive increase in e-wallet payments in e-Commerce transactions.

Evolution of digital payments as a percentage of e-commerce payment method

2. However they are burning cash currently as typical margins are quite thin which are more than offset by discounts being provided

Direct discounts and cashback promotions are widely rolled out to beat the stiff competition amongst top players. Transaction volumes increased but the contribution margin is still negative for all the top players.

Unit economics of a typical e-wallet


3. BNPL is a scheme that most e-wallets are exploring…

All major e-wallets are offering consumers microloans to increase purchasing power while balancing monthly costs through interest-free installments. Especially due to the low circulation of credit cards and financial inclusion found within the country.


4. …to drive consumers up the purchasing ladder – such schemes have seen great success in other developed nations

Tech-savvy Millenials make up for the majority of Indonesia’s growing middle-class. Pay later, investments and insurance are sought after fintech features of Indonesia’s middle class.

Meanwhile, the “aspiring” middle class is keen to save money on e-commerce, food tech, and offline merchant discounts. BNPL schemes are currently pushing the middle-class population up the purchasing power ladder.

5. BNPL can be extended to B2B2C models where loans are provided in partnership with SME sellers, enabling them to tap into the larger cohort of consumers that aren’t touched by e-commerce

A leading example of the B2B partnership model in BNPL is Afterpay based in Australia. Afterpay’s merchants forfeit a percentage of their returns by bearing the microloan interest charges for their customers. In return, merchants increase AOV and overall sales, without bearing the risk of delinquent payments. Budget savvy customers benefit from increased purchasing power and cash flow.

This is one of the leading use cases for BNPL schemes in many other global markets as well and brings on board the larger base of middle-class consumers who haven’t yet shopped online. Indonesia also has seen many offline stores strike such partnerships for BNPL schemes and we expect the B2B model to be a strong driver of monetization going forward.

Case Study of AfterPay


  • Mrigank leads business research and strategy engagements for leading internet sector corporates at Redseer Strategy Consultants. He has developed multiple thought papers and is regularly quoted in media and industry circles.