Effective Annual Interest Rate in Topping Up Your eMoney or eWallet


I am a bit intrigued to think about the top up fee that we need to pay to replenish our eMoney or eWallet, for example, I found the example, where we need to pay Rp 1,000 for each top up transaction. Since this world is driven by interest, which is the mother of economy, then I guess, somehow I should relate this top up fee to interest that I have to pay implicitly.

How to do this?

Let’s say, the case is:

  • we want to top up Rp 300,000 with a top up fee Rp 1,000.
  • we replenish this top up every two weeks, meaning that Rp 300,000 will be used up to buy food, transportation, etc.

So how much is the implicit effective annual interest rate that we need to pay:

The analysis is shown below.

The implicit effective annual interest rate is 8.43%. This seems to me quite high since this is not too far from working capital borrowing interest rate, though we don’t borrow anything from anybody, as that’s pretty much our own money.

I will go further by having sensitivity analysis with one-factor change, that is the replenished amount, and keep the remaining assumption constant.

Sensitivity (1) One Factor : The Replenished Amount (IDR)

The chart below demonstrated that the effective annual interest rate will fly from 62% for replenished amount of Rp 50,000 declining to near to 5% for the replenished amount of Rp 500,000. This will mean that the higher amount that we replenished, then the lower effective annual interest rate that we need to pay for this top up transaction.

How about if we keep all assumptions constant, but the frequency of the top up?

Sensitivity (2) One Factor : The Frequency of the Top Up (in Days)

From the above chart, we could see that the longer days that we do this top up transaction, then the interest will decline from near 30% (if we fill up the top up every 5 days) to near 2% (for every 60 days) with the amount of Rp 300,000 every time we top up the emoney or ewallet.

How about if we make the amount of the replenishment and the frequency of the top up becoming variable?

Sensitivity (3) Two Factors : The Replenished Amount (IDR) and the Frequency of the Top Up (Days)

The above table gave us that the effective annual interest rate is quite far by wide margin. If we top up Rp 50,000 every 5 days, then the interest rate will be 324%…wow is this really what we paid?

If we top up Rp 500,000 every 2 months (+/- 60 days), then the interest is around 1,18%, this sounds very low.

So what we could get something out of this analysis:

  1. All fees that we pay, there is implicit effective annual interest rate that we need to pay to the service provider.
  2. The top up fee of Rp1,000 may sound small money, but when we link that fee to the frequency of the top up transactions and the amount being replenished, that small amount might give us interest rate that shoots through the roof.
  3. The old adage will ring again, watch your spending habits. My two-cents suggestion: drive your car till it drops!

#StayatHOme #SavetheWorld

I guess, this is new reality

in the future, contact-free economy will be more preferred

as Covid-19 probably might come again in different form

meaning that face-to-face meeting will be reduced

yes, life will change to new reality

people now comes to higher awareness that interfacing with other humans exposed him/herself to undetected risk

I am glad to be honest

Covid-19 happens after we are in the internet world

can’t imagine if this came prior to 1990s

life will be much difficult

so we don’t have total shutdown, but we are able to flatten out the curve

to buy time

to get the vaccine coming

I hope all people have that patience (lots of that)

in the future, which is not too distant

sure…human is the most complex organism…

that has been survived for thousands of years…

yeah…i hope human learnt something of value from this Covid outbreak

we can’t exploit nature too much..

balance is the key

somehow I feel, this is God’s way to bring us back to basic stuffs


give break to nature

and room to breathe again

I watched one video, dolphin back to one of Turkey river

usually it is a crowded river with many ships back and forth

but since the lockdown

dolphine back again swimming


I believe we don’t need so much to take from nature

all this consumerism world is crazy

how many dresses we need

how much food we need to eat

how much oil we need

how much..

how much..

never enough

we burn everything off

we need to give room to the nature
we can’t occupy every inch of this earth

we don’t need that

we need to define the new “enough” to this new generation

we need to define new stuff for whatever it is meant to be rich

to be successful

do we need to beat up earnings forecast every quarter?

do we need to kill so many animals to satisfy our hungry to being a man

at the end, we don’t even bring anything out from this earth

just a gravestone and a memory 

at the end


All these wordings are not originally coming from me, somehow I read there somewhere and they are stuck on my mind.


Do you need Bank or Bank Services?

What does a cash flow mean to the company? Have you ever heard people said Money is sweetener than Honey.

Which one is more convincing? Someone showing you that he has huge cash or someone showing you the balance sheet? Cash is real….

If someone just gave you the income statement without the other statements (balance sheet, cash flow) (Note: remember Enron’s case), you’re better off to be careful…Income statement can’t be judged without really looking at the balance sheet and cash flow statements. All are from the same coin. As a coin, there is no half-coin. You either have an intact coin or no coin at all.

If your customer doesn’t pay you in due time, or asking you to give them extended credit after the due date, it means you’re lending them more, or they’re borrowing from you. It’s sometimes a bit confusing this since no cash flow outflows…yet, if you are thinking it a while, it could mean you receive the receipt first and then give back the money to the debtor. It might stay at the same account : Accounts Receivable. If the debtor doesn’t give you interest on that extended period, then it means you subsidize the interest since you need to finance that Receivable somehow. Need to calculate the interest then, don’t forget using the Compounded Annualized Interest!

If someone is showing that his/her company has an outstanding sales growth (also look at the balance sheet)…then you need to think about who finances that growth…Someone somehow should finance that growth…Other People’s Money! It might be vendor/supplier?

Is electronic money real money? Is it not debited out from your bank account? Still under your control over the spending, but it is a money to spend!

Instead of being happy, watch out if the company’s working capital increased! A French consumer goods company whose CEO announced in 2001 with considerable pride, “Our working capital has increased from €1 million to over €4 million with our current ratio rising from 110% to 200% and the quick ratio rising from 35% to 100%.” The company declared insolvency six months later. (taken from : Need Cash? Look Inside Your Company, Kevin Kaiser and S. David Young, Harvard Business Review May 2009)

If you are sitting with your problems, someday, it will become everybody’s problems.


Close behind options in importance is the thought that a project consists of many series of cash flows and that each series deserves its own specific risk adjusted discount rate. Decomposing the cash flows of an investment may lead to significantly different results than the calculation of the net present value of an investment’s net cash flow. Even the use of one risk adjusted rate for a series of cash flows must be
questioned. Under what conditions is it correct to use (l  r)n with the same r for all values of n to compute the present value of a cash flow? (page XVII-XVIII, Advanced Capital Budgeting, Harold Bierman Jr. and Seymour Smidt)


I really don’t know one plane from the other…to me they are all marginal costs with wings.

Alfred E. Kahn, C.A.B. chairman. New York Times, April 23, 1978.

Ten percent of what I teach is wrong and should be ignored. The problem is that I do not know which ten percent.

Cornell University Professor


Young professor : how can you get away with asking the same examination question each year?

Old professor : the answers change.



Quoted from The Capital Budgeting Decision: Economic Analysis of Investment Projects. Fifth Edition. Harold Bierman, Jr., and Seymour Smidt. Macmillan Publishing Co., Inc.. 1980.