Securing this license would mean that TikTok would be directly competing with big e-commerce companies like Shopee and Lazada in Southeast Asia.
Short video platform TikTok’s parent company ByteDance is recently in the early stages of discussions in order to secure a payment license in Indonesia.
This shall further help TikTok to bolster its e-commerce objectives in a major market, amid the heightened scrutiny from global authorities, especially the US. Getting a payment license would be a big advantage for people who create and sell things on TikTok. It would let TikTok make money from transaction fees. This means TikTok would be competing with big e-commerce companies like Shopee and Lazada in Southeast Asia.
Following TikTok CEO Shou Zi Chew’s announcement in June about investing billions of dollars in Indonesia and Southeast Asia, the news about the payments license came up. According to two sources familiar with the matter, TikTok, which is owned by Chinese tech giant ByteDance, is in discussions with Indonesia’s central bank, and the application is being viewed positively.
A spokesperson for TikTok confirmed the talks on Friday and mentioned that having an Indonesian payment license would benefit local creators and sellers on their platform. The sources requested to remain anonymous as the negotiations were confidential. Bank Indonesia, the central bank, did not respond to a request for comment.
TikTok’s Strong Presence in Indonesia
TikTok is very popular in Indonesia, with 125 million users each month. It’s similar to its popularity in Europe and a bit less than in the US, where it has 150 million users. The central bank of Indonesia is looking at TikTok’s request for a payments license positively.
In China, TikTok’s counterpart called Douyin, which is also owned by ByteDance, got a payments license in 2020. However, it’s not clear if TikTok has gotten a payments license in any other part of the world.
Indonesia is a big country with over 270 million people, and in 2020, there was almost $52 billion worth of online shopping transactions there. Around 5% of these transactions happened on TikTok, especially through live-streaming features.
Even though TikTok is popular for shopping, it has decided not to start an online shopping platform in Indonesia. This decision comes after concerns were raised by senior officials about the potential increase in Chinese-made products coming into the country.
The US government has shared concerns about potential Chinese influence on TikTok. As a result, there’s a ban on using TikTok on government devices. However, TikTok has always been clear that it doesn’t share U.S. user data with the Chinese government and has taken strong steps to protect user privacy and security.
Similar restrictions have also been put in place in Australia and Canada. Despite facing these challenges, TikTok’s effort to get a payments license shows that it is committed to expanding its e-commerce services in Southeast Asia.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.