neil davidson

Singapore based, mobile payments, solution provider, Coda Payments has been working with telcos in Southeast Asia to liberalise payments and help digital content consumption grow in the region. Yet there are constraints, feels Neil Davidson, CEO & Founder of Coda Payments that hinder the growth of e-commerce in Indonesia, where it has one of the largest stakes currently. And that according to him is “underdeveloped payments infrastructure”.

In an e-mail interaction with e27, Davidson said, “Coda is a great way for customers to purchase low-value digital content, but we are not a true payment service.”

E-commerce solutions provider, Vela Asia, ranks Indonesia as the most e-commerce ready country in Southeast Asia followed by Singapore. The ranking incorporates both market potential and infrastructure availability, evaluating factors such as internet penetration, transaction value, mobile usage, ease of online payment and delivery. Indonesia’s strong result was largely driven by its 240M population, with an estimated 55 million internet users already online despite low internet penetration rates.

In another report, Vela Asia estimates that e-commerce in the archipelago would be worth US$18 billion by 2015, up from the current US$8 billion.

However, Davidson sees hindrances and to change the scenario, he feels, “Debit and credit card penetration must increase in Indonesia for e-commerce to reach full its potential.”

According to a report by MasterCard, released earlier this year in September, cashless payments in Indonesia account for only 31 per cent of the total value of consumer payments. MasterCard puts Indonesia in a category of countries it describe as “Inception,” alongside countries like Nigeria, Russia and Colombia. “These countries have only just begun to move away from cash. Only 20 per cent of Indonesians over the age of 15 have bank accounts, and only 11 per cent have debit cards,” says the report.

Payment scenario in Indonesia

About 67 per cent of the value of all consumer transactions in Indonesia still is cash based. Only 3.7 per cent are credit card based and 1.4 per cent through debit cards. Another 3.27 per cent happens through cheques. But of the total number of transactions, irrespective of the value, less than one per cent transactions are not cash based.

In such a scenario, Coda Payments, according to the CEO & Founder, “makes it easy for customers to charge purchases of digital content to their prepaid mobile account or to charge them to their postpaid mobile bill. All they need to do is enter their phone number at a merchant’s website, mobile website, or smartphone app, respond to our SMS confirmation, and their purchase will be confirmed. It takes about 10 seconds.”

Read also: Indonesian e-commerce goes global with IPAYMU and PayPal tie-up

In Indonesia, Coda Payments has PulsaQ – a play on words which means “my airtime” in Bahasa Indonesia – a service that allows AXIS customers purchase a range of digital content on the web, from e-books to game credits.

Coda Payments, earlier this month secured a Series A funding worth US$2.3 million in Series of which US$1 million have come from US$15 million worth GMO Global Payment Fund founded by Tokyo-based online payment processing company, GMO Payment Gateway, and venture capital/incubation company GMO VenturePartners (both part of the Japanese internet service provider, GMO Internet group). For the record, Japan’s credit card company, Credit Saison too is particpating in the Global Payment Fund now. Other investors who have bet their money on Coda Payments are Rakuten Ventures, CyberAgent Ventures, Golden Gate Ventures, and Skype co-founder Toivo Annus.

“We will use the new funds to broaden our geographic footprint,” says Davidson. Coda Payments hopes to expand into Malaysia and have tie-ups with telcos in Singapore too. It already has offices in Singapore, Jakarta (Indonesia) and Kuala Lumpur (Malaysia) in the region besides Sunnyvale in the US.

Also, Davidson says, “The partnership with GMO will make it easier for GMO Payment Gateway’s customers (i.e., online merchants) in Japan to make use of Coda’s services as they expand into Southeast Asia.”

Read also: Now, consumers can transfer money on social media via DOKU