According to reporting from Nikkei Asia, Japanese consumer finance group Orico is preparing to debut a credit card business in Indonesia, a market ripe for expansion thanks to a growing middle class.
Orico will invest in Honest Financial Technologies International, an Indonesia-focused fintech startup that established a full-scale virtual credit card business this year for use on smartphones. The investment amount was not disclosed, say Nikkei Asia.
Through the tie-up with Honest Financial, Orico will issue virtual credit cards in Indonesia as soon as this year, in addition to plastic cards to customers who request one. The Japanese company offers extensive know-how in the credit card industry.
Nikkei Asia say that the operation will employ artificial intelligence to conduct credit checks and use video chats to confirm the cardholder’s identity and prevent fraud. Applicants can be issued a card in as little as three minutes, and they pay no annual fees. A QR code payment service linked to the cards is also in the works.
Orico, formally known as Orient Corp., traces its roots to a financial services cooperative launched in Hiroshima in 1954. Honest Financial debuted in 2019.
Credit cards had only about 5-percent penetration in Indonesia in 2021, much lower than the 35-percent adoption rate in Thailand and 30-percent in Malaysia, say Nikkei Asia.
Most Indonesian credit card holders have yearly incomes exceeding USD 35,000, which is considered high-income. Because middle-class earners have less access to credit cards, QR code payments have become a popular alternative.
But in Indonesia, QR payment apps are usually unsuitable for large purchases such as cars. The new credit cards are intended to solve that problem, say Nikkei Asia.
Banks are the principal credit card issuers in Indonesia, but traditional lenders face barriers to entry into fintech applications due to the extra investments needed for computer systems.
Source: Nikkei Asia