JAKARTA -- Singaporean ride-hailing service Grab has partially suspended its electronic payment service in Indonesia, following similar moves by other e-commerce players feeling the heat from local regulators.
Grab halted GrabPay Credits, a function that lets users top up their e-money balances through local banks, ATMs, credit cards and some retail stores. The service was launched in November 2016 as a convenient option in a country where most people do not have credit cards.
"In order to extend our services to all Indonesians, we are having intensive discussions with Bank Indonesia to obtain the required licenses," Ongki Kurniawan, managing director of GrabPay Indonesia, said in a statement. "During this process, we have temporarily halted the top-up [function] for GrabPay Credits from Oct. 16, 2017 at 09:00 onwards."
Users can still draw on their existing balances to pay for rides booked with the app.
The central bank has been stepping up regulatory scrutiny of increasingly popular e-money services, vowing to ensure consumer protection. Besides Grab, ventures such as online marketplace Tokopedia -- which recently announced it will raise $1.1 billion from China's Alibaba Group Holding and other investors -- have suspended their e-money services pending regulatory approval.
Critics say the regulatory framework has not caught up with the e-commerce boom, and that service suspensions will hamper the growth of Indonesia's digital economy. E-money is the key to boosting online purchases, given the lack of credit cards among the populace.
Grab, which does business across Southeast Asia, has positioned Indonesia as its most important market. Earlier in 2017, the company committed to investing $700 million in the country, including $100 million in "companies focused on deepening financial inclusion." It appointed Kurniawan, a former managing director of the Line messaging app's Indonesian operations, in September to lead the expansion of GrabPay.
A prolonged suspension of GrabPay Credits could hurt the Singaporean company's chances in a bruising battle with rival ride-hailing services. Uber Technologies of the U.S. does not have a top-up service and local competitor Go-Jek said it already holds an e-money license.