TikTok to obtain payments license in Indonesia to expand its South Asia presence

Short video application TikTok has revealed that it intends to apply for a payments license in Indonesia. As reported by Reuters, the company has commenced discussions with regulators in that country. If successful, this move could help it expand its customer base in South Asia. 

This follows CEO, Shou Zi Chew’s announcement that the business planned to invest in Indonesia and the South Asian region in the next few years. According to Chew, the potential investment is worth billions of dollars.

Based on Indonesia’s TikTok user population (125 million users), this seems like a great business move. Additionally, the country completed e-commerce transactions worth $52 billion in 2022 while 5% of that volume occurred on the short video app.

With an official payments license, the company would profit from transaction charges. But more importantly, it would allow it to compete directly with e-commerce giants in the South Asian market like Shopee and Lazada.

Meanwhile, the short video app also has plans to launch a unique e-commerce business for Chinese goods in the US. Due to concerns over the Indonesian market potentially being flooded with China-made goods, it won’t be launching the vertical there.

Two sources familiar with the payments license application shared that TikTok had commenced negotiations with Indonesia’s central bank. They further stated that the bid was going smoothly so far. Shedding light on the pros of the deal, a company representative said a payments license would greatly benefit Indonesia-based creators and sellers.

Efforts to have the sources reveal their identities failed given the deal’s sensitive nature. Over the last few years, the ByteDance-owned app has recorded immense growth, especially in terms of usage. TikTok is typically the place to find popular music trends and eccentric yet addictive hashtag challenges.

In 2022, it bested Meta-owned Instagram and Facebook to be the app with the most downloads. This year, its market value is currently $65 billion. That’s why its e-commerce business appeals to affiliate marketers, business owners, and influencers advertising for brands.

Read also: TikTok now allows users make posts in text format as social media competition tightens

TikTok prepares for new EU regulations 

As the European Union gears up to introduce the Digital Services Act (DSA), TikTok has announced many new features to enhance its compliance with the new laws. One of the new provisions is that platforms like Google must take extra steps to protect internet users.

These steps include regulating illicit content, outlawing some advertising tactics, and relaying data to relevant government agencies. Meanwhile, the company failed a stress test that sought to gauge its readiness for the new regulation. 

According to Theirry Breton, an EU industry expert, the app needed to do more ahead of the DSA’s implementation on January 2024. Some of the new efforts include simplifying the process of reporting illegal content for European users and eliminating targeted advertising for users between the ages of 13 and 17.