1 CHAPTER I INTRODUCTION 1.1 Background Technology evolution in payment system has created a shift in payment instrument usage, from cash to card-based payment instrument and recently to electronic money (e- money) payment (Bank Indonesia, 2013a: 196). This evolution is resulted from the rapid technology development and payment system users becoming technology minded (Bank Indonesia, 2013a: 196; Mohamad 2011a: 12). Other than efficiency, using non cash payment instruments is more beneficial than cash, such as reducing the high cost and energy in maintaining cash, reducing inflation, and criminal prevention (Bank Indonesia, 2014a: 4-5). Learning the benefits non-cash instruments have to improve efficiency and support the business climate in the country, Bank Indonesia launched Gerakan Nasional Non Tunai (GNNT) on August 14, 2014 (Martowardojo, 2014: 3). This program is aiming to increase people’s awareness in using non cash payment instruments or in other words to create ‘less cash society’ within the nation (Martowardojo, 2014: 3). However, the current condition shows that many of the Indonesians don’t have the access to non-cash payment system services (Martowardojo, 2014: 3). It is because most of them do not have the access to banking services. As of 2014, there are about 155 million bank accounts in Indonesia (Prasentiantono, 2015: 15). With the assumption that one person owns two bank accounts, it can be calculated that of 250 million people in Indonesia, only 75 million or 30% of them own bank account (Prasetiantono, 2015: 15). It also indicates that 70% of the Indonesian people do not have the access to banking services, hence also to non-cash payment instruments. On the contrary, there were 303,695,000 cellular mobile phone subscribers as of 2013 according to Business Monitor International (2015: 18), which exceeded the number of population itself. Business Monitor International (BMI) also estimated that the number increased to 334,064,500 in 2014 which means that the penetration of cellular mobile phone reached 123,1% by 2014 (Business Monitor International, 2015: 18). With the high rate of mobile phone penetration, using mobile phones for financial transactions can increase the usage of non-cash payment instruments, especially for those who do not have the access to banking services. Therefore, telecommunication (telco) operators adopt this concept and launched their own e-money, known as mobile money so that 2 customers can make financial transactions using their mobile phones. Since mobile money can reach low-income segments or those who do not have the access to banking services, it can support the financial inclusion in Indonesia. Eventually, the expansion of financial access on the banking system can support the economic growth of the country (Mohamad, 2011a: 12). T-Cash by Telkomsel is the first mobile money in Indonesia which was launched in 2007, followed by Indosat Dompetku in 2008, and XL Tunai in 2012 (Camner, 2013: 5). Mobile money was launched by the operators as part of their value-added services. With the high the number of active SIM cards in the country and the tight competition between operators, the market is heading towards saturation (Telegeography, 2010). Therefore, they continuously innovate their product and services, in which mobile money is also included.