As digitalization grows, will Indonesia’s agent networks survive?

• by Rhifa Ayudhia and Suardi Ihsan
• Dec 10, 2025
• 4 min

Despite Indonesia’s booming digital economy, cash remains central to daily life, and millions of agents continue to bridge the gap between cash and digital finance. Even as mobile banking and QRIS adoption rise, agents remain indispensable, driving financial inclusion and helping communities access essential services. Their adaptability shows that Indonesia’s digital future will still rely on strong, human-centered agent networks.

Indonesia’s digital economy is set to hit $130 billion this year—so why is $65 billion in cash still changing hands, more than double a decade ago?

Today, Indonesia is Southeast Asia’s largest digital economy, poised to reach USD 130 billion by the end of this year—by all measures a success story of rapid digital growth. Yet, even as digital transactions surge, Indonesia’s vast informal sector holds on to cash as a central aspect of daily life. Despite the expansion of digital payments, cash in circulation has more than doubled over the past decade to reach approximately USD 65 billion as of July 2025.

At the heart of this coexistence are millions of local agents who make the digital economy work for everyone. They include small business owners who operate from kiosks alongside warungs, who serve as trusted financial intermediaries that connect communities to banks, payments, and other digital products that would otherwise remain out of reach.

Over the past five years, the number of bank branches and ATMs in the country declined by 25%. In contrast, MSC estimates that the number of agents has grown at a 40% compound annual growth rate (CAGR) over the past decade to reach more than 2 million registered agents nationwide in 2025. Yet, only about one-third of agents remain consistently active. Despite this, agents remain a cornerstone of Indonesia’s financial inclusion efforts as they continue to serve as the primary channel for FSPs to reach last-mile communities.

As Indonesia’s digital economy grows, the environment around these networks has also been shifting. Smartphone and internet penetration continue to deepen and currently reach nearly 80% and 68% of the population, respectively. Meanwhile, cashless transactions, particularly QRIS, have been growing at a rate of more than 150% year-on-year. As more people begin to transact independently through mobile and internet banking, a critical question remains. One that we often encounter in our work with regulators and providers: As fully digital alternatives gain traction, will agents remain relevant?

Recent evidence suggests agents continue to be indispensable. Findex 2025 shows that only 30% of Indonesian adults conduct payments independently through self-service channels, such as mobile applications, cards, or online platforms, which indicates that most people still depend on assisted channels for financial transactions. This continued reliance on assisted channel reflects in agents’ growing activity, as transaction values continue to increase, with cash-out transactions alone rising by 43% between 2017 and 2023. The average transaction volume through agents also grew five-fold between 2017 and 2023.

Globally, digital growth has yet to replace cash. Agents keep the two worlds connected. In Kenya, one of the global pioneers of mobile money, cash in circulation continued to climb by USD 2.6 billion in 2024, which marked a 5.6% increase from the previous year. Meanwhile, agents facilitated mobile money transactions worth USD 67.3 billion in 2024, nearly double the level recorded in 2019.

We see a similar trend in India, home to one of the world’s largest and fastest-growing digital payment ecosystems. Digital payments have surged, driven largely by the Unified Payments Interface (UPI), a real-time platform that enables instant fund transfers between bank accounts. At the same time, cash in circulation has more than doubled to reach USD 418 billion by September 2024.

UPI transaction volumes have increased tenfold, from 12.5 billion in 2020 to 131 billion in 2024, and now account for nearly 80% of all digital payments. Meanwhile, India’s agency business has continued to grow for almost two decades and is projected to reach USD 1.8 billion by 2025. These examples reveal that even in highly digitalized markets, assisted channels remain essential, which suggests that digital and agent ecosystems will coexist for years to come.

Indonesia mirrors this global reality. The strength of its agent model lies in its adaptability to a dual cash-digital system. What began as a simple cash-in, cash-out function has gradually expanded in scope. While not all agents can offer advanced services, many have started to diversify and now sell digital products, offer loans and microinsurance, facilitate QRIS payments, and even serve as delivery or return points for e-commerce.

Traditionally, agents have been vital to enable government-to-person (G2P) transfers and ensure cash reaches low-income households efficiently. Building on this foundation, many agents are now becoming the frontline for financial service providers (FSPs) to deliver more advanced financial products, such as microloans, savings, and climate-risk insurance, which helps strengthen rural economies and household resilience.

Agents’ adaptability has built both structural and economic resilience. Agents are not competing with Indonesia’s rapid digitalization. Instead, they are powering it. Rather than being displaced by FinTechs and mobile banking apps, they form the human infrastructure that makes digital services accessible and trustworthy, especially in areas where cash use is prevalent and digital literacy is low.

At the same time, the financial viability of agents underscores the model’s sustainability. In 2023, 95% of agents reported operating profitably. Median monthly earnings increased from just USD 6 in 2017 to USD 134 in 2023. For many agents, the agency business has evolved from a side hustle into stable, dignified employment that sustains families and strengthens local economies.

The shift toward digital finance in Indonesia is well underway, but agents will remain the critical bridge that connects digital systems to communities. As the ecosystem matures, stakeholders in the ecosystem should now shift their focus from expanding agent coverage to strengthening their capabilities, which would enable them to manage more complex, higher-value transactions and provide greater value to customers.

Providers can support this evolution if they invest in advanced training, streamlined business processes, and data-driven, AI-enabled, tools for effective agent management. Even as technology transforms financial services, the human presence and local trust that agents bring will remain essential to ensuring that Indonesia’s digital finance is both inclusive and scalable. The future of finance is digital, anchored by the agents and their customers who make it work.