TikTok Eyes Indonesian Payments License to Boost eCommerce Business

TikTok is reportedly in early-stage talks with Indonesian regulatory authorities to obtain a payments license.

The ByteDance-owned social media platform’s application has been favorably received by Indonesia’s central bank, Reuters reported Friday (Aug. 4).

A payments license would enable TikTok to benefit from transaction fees and would help local creators and sellers on its platform, according to the report. It would put TikTok in direct competition with Southeast Asian eCommerce giants Sea’s Shopee and Alibaba’s Lazada.

At present, the platform has 125 million Indonesian users each month, with 5% of the country’s $52 billion worth of eCommerce transactions taking place on the platform last year, the bulk of that from livestreaming, the report said.

TikTok announced in June that it will invest billions in Indonesia and Southeast Asia, confirming earlier reports that the company was looking to Asia to help it expand its eCommerce sales from $4.4 billion in gross merchandise value (GMV) to $20 billion.

CEO Shou Zi Chew said at a forum the company convened in Jakarta on its app that the investment will be made over the next few years, Reuters reported June 15.

TikTok said it would invest in training, advertising and supporting small merchants that wanted to sign on to its eCommerce platform, TikTok Shop, according to the report. Chew added that the company has 2 million small vendors selling their wares on its platform in Indonesia, the largest economy in the region, and that TikTok has 8,000 employees in Southeast Asia.

A week before that announcement, Bloomberg had reported that TikTok was looking to Southeast Asia to massively expand its eCommerce business. The company is banking on markets like Indonesia, where influencer videos are popular with consumers, the report said.

TikTok is investing in Asia as it faces challenges in the United States and other countries.

It was reported on July 18 that the company failed to fully pass a recent test conducted by the European Union’s governing body, raising concerns that the social media app is not yet compliant with the upcoming regulations of the EU’s Digital Services Act.

In the U.S., TikTok is reportedly having trouble attracting merchants to its online shopping service due to concerns that the government could ban the app.