Online shopping in Indonesia flourishes despite scam concerns

Online shopping in Indonesia flourishes despite scam concerns

Being an online-shopping enthusiast, Youth and Sports Minister Roy Suryo recently bought a fixed-gear bicycle, known as a fixie, from an online shop after seeing an advertisement on one of the country's largest online retailers.

After contacting the seller and asking about the price, the minister finally agreed to buy one of the fixies for about Rp 1 million (SS$100). Roy, who was known as an IT expert before being appointed a minister, transferred the money after the deal was made late last month.

However, the sale turned out to be a scam, as Roy never received the bike. Luckily for Roy, the seller was arrested after the minister reported the incident to the police.

Many other online shoppers have also fallen victim to scammers in recent years. For example, Nurul Pudjiastuti, a dentist who lives in West Cilandak, South Jakarta, lost Rp 3 million in February last year when she was deceived after trying to buy a cat from an online pet shop.

Roy's experience is just one of several high-profile cases that have brought the issue of online scams to the public's attention, reminding citizens that online shopping, as hassle-free and enticing as it is, must be handled with care.

A recent study by media research firm Nielsen said the e-commerce industry was growing fast in Indonesia, as the country was seeing a rise in digital consumers who peruse the Internet to purchase goods as well as services, such as for travel.

Nielsen found that although Internet penetration in big cities remains at only 31 per cent in 2014, online purchases have grown rapidly, from 6 per cent in 2010, to 15 per cent in 2012 and 13 per cent this year.

Scams take place not only when traders do not deliver ordered goods, but also through the use of credit cards. The survey found that payment security, especially credit card usage, was one of the main concerns voiced by Indonesian consumers.

According to the survey, 6 out of 10 consumers said they were not willing to provide their credit card details online. Meanwhile, 50 per cent felt burdened by delivery charges and 49 per cent were confused about procedures in various online shops.

"It is important for online retailers to guarantee payment security in order to gain trust from consumers, because the threat of credit card scams is the main concern that prevents someone purchasing something on the Internet," said Anil Antony, executive director of consumer insights at Nielsen Indonesia.

Rusdy Sumantri, associate director of consumer insight at Nielsen Indonesia, said the high level of concern about credit card scams could explain why the "cash on delivery" (COD) payment method was dominant across the country.

Rusdy said security concerns and the small size of the credit card industry in Indonesia had prompted online retailers to also provide various methods of payment aside from COD, such as payment facilities offered by a number of banks that cooperate with official online shops.

"For example, BCA KlikPay from Bank Central Asia or Mandiri Clickpay from Bank Mandiri act as exclusive third parties and will process payments for online purchases using credit cards issued by those banks," Rusdy said.

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