eWallets Don’t Make Money, Says Mandiri Capital Chief

The CEO of PT Mandiri Capital Indonesia, the venture capital arm of PT Bank Mandiri, said the only way digital payment platforms can ever make money is by acting as a sort of portal into other services, otherwise it’s “just a cash-burning exercise,” according to reports.

CEO Eddi Danusaputro said that in Indonesia, providers of digital payment services are so desperate for customers and market share that they’re offering deep discounts. However, the practice is unsustainable and won’t make money in the long run, he said.

Many companies see the cash loss as a necessary way to grow. For example, GoPay, which is a Gojek service, and Ovo, owned by Grab, have been handing out discounts and cash-back offers that hover around 50 percent and can get as high as 90.

Even Mandiri Capital has invested in LinkAja, another payment company.

“Nobody makes money from e-wallets,” Danusaputro said. Fees from sellers keep “coming down, gone are the days of 2 percent or 3 percent. The banks are making money from the funding side and savings or checking accounts of the merchants.”

The CEO said companies need to funnel users to more profitable ventures, either by promoting other financial services or selling them. For example, Mandiri Capital is looking to get fees from public services like toll roads or tickets on trains.

In other digital payments news, cashless payments firm USA Technologies (USAT) is expanding its partnership with amusement kiosk operator National Entertainment Network (NEN) to bring expanded cashless payment options to more vending machines and devices, the companies announced in a press release.

NEN will utilize USAT’s NFC-capable ePort Connect cashless payment platform on 5,000 additional vending machines over the next year. NEN already uses the payments solution on 400 of its machines.

“For more than 30 years, NEN has grown its business by bringing the best service and most innovative amusement machines to our customers, while keeping pace with the changing needs and preferences of consumers,” said Jim Sevalt, president and chief operating officer of NEN.