We are currently in an era of “phygital” where the retail world has an intersecting world between the physical and digital worlds. Future retail trends trigger the adoption of new emerging disruptive technologies such as IoT, omnichannel And AI. Digitalization and omnichannel bring a breath of fresh air to retail businesses to have a closer relationship with consumers. McKinsey analyzes that “store of the future” which is supported by technology can double retailers’ profits and provide a more satisfying customer experience. The evolution of global digital commerce is changing consumer behavior and having a major impact on retail businesses in Asia Pacific, especially Indonesia and China. This has prompted major changes in Indonesia and China in their business management by adopting POS systems to manage transactions.
Technavio (2024) projects that Indonesian retail business revenues will increase by USD 49.56 billion with an annual growth rate (CAGR) of 4.73% from 2024 to 2028. Meanwhile, the trend of POS usage in China has increased sharply in recent years, and is expected to still grow at a CAGR of 5.23% over the next five years (Mordor Intelligence). The number of digital transactions in both countries has increased significantly with the encouragement of the use of e-wallets for POS transactions. Regulatory support from the government also contributes to the development of digital payments. In the future, digital transactions are expected to continue growing in line with the growth of transactions via POS.
POS has become the backbone of modern retail operations in China and Indonesia. In China, Be happy And WeChat Pay dominate the market, with strict regulatory support through the People’s Bank of China (PBOC) to ensure data security and tax compliance. Mobile payment users via POS in China are projected to reach 618 million by 2028 (Mordor Intelligence) supported by technology adoption, growth data contact less and government policies to expand the digital economy. In Indonesia, platforms such as GoBiz from Gojek and Moka POS are used by business people to manage transactions, integrated with payment methods such as QRIS. The number of Moka POS users in Indonesia continues to increase, with more than 45,000 merchants using this service to date. With the continued development of the digital business ecosystem in Indonesia, Moka is one of the digital cashier platforms that plays an important role in supporting the digital transformation of MSMEs. This company is also integrated with the Gojek ecosystem, providing comprehensive solutions for merchants in Indonesia. Until June 2024, 56% of POS transactions in Indonesia will be carried out using e-wallets. These two countries have quite large and unique market shares, and have different regulatory dynamics in playing an important role in the POS realm.
Data security and information protection
The successful use of POS in retail businesses in China cannot be separated from the security of the data provided to customers. China Personal Information Protection Law (PIPL) was approved on August 20 2021 in Article 60 which states that the Cyber Administration of China (CAC) is responsible for the protection of personal data. JD.com and Alibaba as large retail stores in China ensure that their POS systems meet security standards, including encryption of transaction data to protect customer information from leaks. Another example, at the 2022 Beijing Winter Olympics, PAX Global Technology ensured the POS system used met PCI DSS standards for data security, providing confidence to millions of users during the event.
Similar to China, Indonesia implements the Personal Data Protection (PDP) Law in POS which ensures that all customer data is stored safely and reports data breaches if fraud occurs. In Indonesia, Moka POS protects MSME customer data through cloud technology, ensuring transaction data is stored securely and can only be accessed by business owners.
Tax regulations and compliance
China is known as a country that has strict tax regulations, which also applies to POS systems. POS System required to be integrated with the platform Drummer (electronic invoice) to ensure all sales have been documented and taxes have been paid. This helps the Chinese government in verifying transaction data to prevent evasion of applicable taxes. In the realm of taxation, POS system in Indonesia must follow the regulations of the Directorate General of Taxes (DJP). DGT requires that POS systems integrated with fiscal tools to report transactions properly and generate e-Invoices for tax compliance. Of course, the DGT wants to ensure that the taxes imposed on every business transaction can be monitored and reported accurately.
Payment System Integration and Financial Compliance
UNDP Digital Development Compass assessing that both China and Indonesia have the same score (5) in terms of payments, namely the transformational stage. POST System Applicable payments must be able to be completed using various payment methods including QRIS to facilitate safe and standardized digital transactions. Until June 2024, 56% of POS users have made transactions using e-wallet through mobile device (Statista, 2024). Bank Indonesia also issued BluePrint retail payment system by inviting people to switch to digital payments. All transactions are via POS System with digital payment regulated by Bank Indonesia for transaction security and compliance with monetary policy.
Similar to Indonesia, POS transactions in China are also compatible with various payments such as Be happy, WeChat Pay and UnionPay. The Chinese government also participates in monitoring payment systems to ensure compliance with financial and security regulations. People’s Bank of China (PBOC) represents the government supervising and regulating digital payment systems. POS system must meet various security and licensing requirements to ensure safe and regulatory transactions.
UNDP Digital Development Compass gave a score of 3.27 to the existing regulations in China which are currently at the third stage, namely systematic. Indonesia only got a score of 2.79 which is currently in development at the second stage, namely opportunistic. Although Indonesia and China have similar approaches in regulating POS systems to ensure transaction security and tax compliance, China tends to have stricter and more advanced regulations in terms of personal data protection and integration with digital payment systems. On the other hand, Indonesia has continued to develop and adopted stricter policies in recent years, but is still at a developmental stage compared to China. With a score from UNDP Digital Development Compass which shows that China is already at the systematic stage, the Indonesian retail industry should prepare itself to implement more advanced policies in the future. Indonesia can create a roadmap to integrate a more sophisticated POS system, which can handle tax compliance and data security effectively. It is hoped that the POS system can become a disruptor in the retail industry in the future.
