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Demand for Mobile Money and Branchless Banking Among Micro and Small Enterprises in Indonesia


Working Paper 16

September 2014

Authors: Guy Stuart, Michael Joyce, and Jeffrey Bahar

Micro and small enterprises (MSEs) represent a significant portion of Indonesia’s economic and employment activity. They constitute 98 percent of all businesses and provide 94 percent of employment. MSEs represent the most significant portion of economic activity for the poor population of Indonesia; the poor are more likely than other income groups to use MSEs not only for employment and income generation but also for consumption. MSEs are therefore important links in the chain of financial inclusion and poverty reduction. By bringing more MSEs into the formal financial sector, it is expected that more of the poor population of Indonesia will also be provided with financial services.

The potential of mobile money and branchless banking (MM & BB) services to provide financial services to previously “unbanked” market segments has been widely noted around the world, but this potential has not been realised in Indonesia. These services use a combination of new technology using mobile phones and agents as local service points to provide financial services to customers and locations that would otherwise be uneconomical to reach with conventional financial services.

This study assesses the potential demand for MM & BB services from MSEs in Indonesia, drawing on both quantitative and qualitative data obtained through 400 survey interviews with MSE owners and 16 focus groups distributed evenly across four provinces: Bali, South Sumatra, South Sulawesi, and West Java. The study was conducted in August and September 2013.​

The TNP2K Working Paper Series disseminates the findings of work in progress to encourage discussion and exchange of ideas on poverty, social protection, and development issues.

Support for this publication has been provided by the Australian Government through the Poverty Reduction Support Facility (PRSF).

The findings, interpretations, and conclusions herein are those of the author(s) and do not necessarily reflect the views of the Government of Indonesia or the Government of Australia. You are free to copy, distribute, and transmit this work for noncommercial purposes.

Suggested citation: Stuart, G., M. Joyce, and J. Bahar. 2014. ‘Demand for Mobile Money and Branchless Banking among Micro and Small Enterprises in Indonesia’. TNP2K Working Paper 16-2014. Jakarta, Indonesia: Tim Nasional Percepatan Penanggulangan Kemiskinan (TNP2K).

To request copies of the paper or for more information on the paper, please contact the TNP2K Knowledge Management Unit (kmu@tnp2k.go.id). The paper is also available at the TNP2K website (www.tnp2k.go.id).