The move is seen as part of TikTok's broader ambitions to expand its ecommerce operations in a significant market. At the same time, the platform faces increasing scrutiny in the United States and other regions.
In June 2023, TikTok's CEO announced the company's plans to invest substantial funds in Indonesia and the wider Southeast Asian region. According to sources familiar with the matter cited by Reuters, TikTok is currently in talks with Indonesia's central bank, and the application for a payments licence is reportedly being received positively.
A spokesperson for TikTok confirmed the ongoing talks and highlighted that obtaining an Indonesian payments licence would benefit local creators and sellers on the platform. If TikTok secures a payments licence, it would open up opportunities for the platform to profit from transaction fees, putting it in direct competition with other Southeast Asian ecommerce companies such as Sea's Shopee and Alibaba's Lazada.
Reuters reports that TikTok has 125 million monthly users in Indonesia at the time of writing, a figure comparable to its user base in Europe and not far behind its numbers in the United States, where it has 150 million users.
It's worth noting that Douyin, TikTok's Chinese counterpart, which is also owned by ByteDance, obtained a Chinese payments licence in 2020. However, it remains uncertain whether TikTok has obtained similar licenses elsewhere in the world.
With Indonesia's population surpassing 270 million, the country's ecommerce transactions reached nearly USD 52 billion last year, according to data from consultancy firm Momentum Works. TikTok accounted for 5% of these transactions, mainly through its live-streaming feature.
While TikTok has plans to launch an ecommerce platform in the United States to sell China-made goods, it has informed Reuters that it does not intend to introduce this service in Indonesia. Officials in Indonesia have expressed concerns that the country could be inundated with Chinese-made imports.
In the United States, TikTok has faced increasing worries about potential influence from the Chinese government. The White House and numerous state governments have banned its use on government devices, and Montana is set to implement a complete ban starting with the following year.
However, TikTok has consistently maintained that it has not shared, nor would it share, user data with the Chinese government. The company claims to have implemented robust measures to safeguard the privacy and security of its users. Besides the United States, Australia and Canada have also prohibited the use of TikTok on government devices.
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