Singtel and Telkomsel eventually want to build a mobile wallet to mobile wallet remittance system

Two of Southeast Asia’s largest telcos, Singtel and Telkomsel, announced yesterday a deal that will allow Indonesians living in Singapore to send remittances to unbanked people back home.

The system leverages a service called SingCash (it falls under the ‘Singtel Dash’ brand) to allow people to send money via a their phones. Recipients of the money will be able to cash-out at 4,500 post office locations (operated by PT Pos Indonesia) across the country.

According to Channel News Asia, the maximum amount a person can remit is S$999 (US$717) per transaction. There will be a S$9 (US$6.50) fee per transfer (As part of the launch, remittance fees will be waived until Friday, March 31).

From the Indonesia side, PT Pos Indonesia is using its remittance service Weselpos Instan to facilitate the transactions.

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Eventually, the two companies want to build wallet-to-wallet transactions and allow people on Telkomsel’s ‘TCash’ service to send and receive money to/from Singtel customers without leaving the system.

Towards the end of the year, the telcos expect to expand pick-up services to Telkomsel service centres and PT Bank BRI branches.

Ririek Adriansyah, the CEO of Telkomsel, highlighted the agreement as a step towards increasing financial literacy in Indonesia.

“Foreign remittance enables them to improve their quality of life as well as provide an opportunity to begin saving for the future. We believe every little effort to promote financial inclusion will also accelerate the growth of Indonesia’s economy,” he said.

According to Singtel, the Singtel Dash service has 500,000 customers after its relaunch in May 2016. The company claims monthly transaction volume has doubled in six months.

This is the first such collaboration between Singtel and Telkomsel.

Unbanked remittances and mobile phones

In 2015, US$409 million worth of total remittances were sent from Singapore to Indonesia, according to the World Bank bi-lateral remittance report. The Indonesian embassy in Singapore says there are over 200,000 Indonesians living in the country — which means, on average, and Indonesian worker sent about US$2,000 per person back home.

However, much of this money was sent to people without bank accounts.

While the data is now a couple of years old, a 2014 financial inclusion report from the World Bank is widely pointed to for one statistic — 36 per cent of Indonesians had accounts in formal banking institutions.

This is a widely-reported quirk of Southeast Asia’s fintech sector and it differentiates it from other markets. A fintech company in the US that targets the unbanked will be aiming at 6 per cent of the population as compared to 64 per cent in Indonesia.

That being said, the unbanked in Indonesia have existed for years. What is happening now is an ability to service these people via technology, thanks to an explosion in smartphone proliferation. According to the Jakarta Post, 132.7 million people in Indonesia were online at the end of 2016 (a bit more than half of the total population). Of that group, 63.1 million of them were using smartphones.

These numbers are expected to grow according to multiple reports.

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Even the most famous remittances company, Western Union, is taking note. It is rolling out a mobile-wallet function and the Western Union Country Manager for Indonesia, Vijay Raj Poduval, told the Jakarta Post, “The company is really placing its bets on digital […] The technology is available, and for Indonesia it is only a matter of time.”

In Singapore, one startup with a similar business model as the Singtel/Telkomsel tie-up is Toast. They currently offer their services in the Philippines, but CEO Aaron Siwoku told e27 it is looking to expand to other countries, including Indonesia.

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