As the central bank’s restriction on credit card ownership comes into effect on Jan. 1, domestic banks are bracing for less business from potential new customers.
Steve Marta, general manager of the Indonesia Credit Card Association (AKKI), said the number of credit cards in circulation next year will grow by just 5 percent, compared with the 12 percent to 13 percent pace in the past couple of years.
“Banks will consolidate their business with the new regulation being effective next year,” Steve said on Friday.
Bank Indonesia, the central bank, issued a regulation earlier this year, to be effective next month, forbidding a person with a monthly income of less than Rp 10 million ($1,035) to have more than two credit cards. The rule will limit the acquisition of new customers, while banks have until Dec. 31, 2014, to adjust for existing customers.
The regulation also set the minimum monthly income for credit card holders at Rp 3 million and the maximum credit limit at three times monthly income. It requires credit card holders to be at least 21 years old, higher than the current minimum of 17.
As of October, 15.8 million credit cards were in circulation in Indonesia.
Still, Steve is optimistic that the volume of credit card transactions could still grow next year by 15 percent to more than Rp 18 trillion per month. As of October, credit card transactions were averaging Rp 16.4 trillion per month, up 8 percent from last year.
“With the restrictions, credit card issuers would pamper their customers with more promotional programs, thus increasing transaction,” Steve said, adding that the regulation also cut interest rates to a maximum of 2.95 percent a month, from the more than 3 percent currently.
Toni Soetirto, a consumer business director at Bank Rakyat Indonesia, was more optimistic than Steve, saying state-owned lenders such as BRI expect to see 20 percent growth in credit card transactions next year from the estimated Rp 3 trillion this year.
“We still have room to grow,” Toni said on Thursday as quoted by Investor Daily.
A survey from credit card principal Visa showed that while Indonesia’s young population — between 18 to 28 years old — prefer electronic payments over cash, credit cards were not their means of choice. According to the survey, only 15 percent of Indonesian youth prefer to use a credit card, compared to 62 percent in China. Control over their finance was the top reason the youth chose not to use credit cards.