Go-Jek acquires payments startup as companies kick against sluggish regulators

Indonesia is still a largely cash-based society. New electronic payment systems are meant to change that. Photo credit: Bindalfrodo.

With Indonesia’s regulators moving slowly, some major companies are jostling to beat the lawmakers. One tactic seems to be acquiring startups to gain access to the digital payments-related tech they need.

Go-Jek – Indonesia’s ubiquitous ride-hailing app and first unicorn startup – has come to an agreement with MVCommerce, the company behind mobile payments service [PonselPay], the latter company’s founder and CEO Hendra Sutandinata said.

“We did a strategic deal with [Go-Jek] to combine our respective strengths supporting the country’s financial inclusion efforts,” he told Tech in Asia. Go-Jek declined to comment.

Emtek, the huge media conglomerate that operates Blackberry Messenger in Indonesia, is said to be in talks to acquire local payment gateway Doku, as reported by tech blog DailySocial.

“We can’t really confirm anything,” a Doku spokesperson told Tech in Asia. Adi Sariaatmadja, who heads Emtek’s digital division, is also evasive. “There are always rumors flying around.”

License to bill

The sudden appetite for fintech startups is most likely linked to licences.

Both Doku and MVcommerce have the right to issue electronic money sanctioned by Indonesia’s central bank, Bank Indonesia (BI). E-money is like Paypal or Kenya’s M-PESA system.

Only 21 companies in Indonesia own an e-money license.

Combined with mobile payments, e-money is an essential tool for any company wanting to enable its users to seamlessly and instantly pay for goods and services online.

In Indonesia, only 21 companies have been issued an e-money license, and BI froze the issuing of new ones a while ago. The majority of those 21 are banks and telcos.

This makes smaller companies that already hold the license a hot commodity. Their acquisition might be a last resort for well-established startups in a rush to develop payments solutions.

Go-Jek’s acquisition of PonselPay will allow it to strengthen its Go-Pay system.

Emtek, which plans to develop BBM into a mobile commerce platform, would also do well with acquiring an e-money license unless it wants to depend on third-party solutions.

The freeze

Why Indonesia’s central bank chose to freeze the issuing of new licenses is a matter of discussion among industry players.

There’s confusion around why one player, the company behind Espay, did obtain a license earlier this year while other applicants are waiting in line.

Aji Suleiman of the Indonesian Fintech Association says some 20 companies handed in complete application forms but are still waiting for a response.

The freeze, he says, is supposed to be temporary.

“BI is encouraging interoperability among e-money products. Once this issue is resolved, then BI will consider opening up new licenses. So they want to focus on having a solid infrastructure first before getting more players on board,” he explained.

At the same time, he said, the top bank is preparing a draft regulation on e-wallets, for which requirements are more lax.

“But e-wallets can only store data, whereas e-money can store funds. So probably, everybody can get an e-wallet license as long as they’re qualified. But to get an e-money license, BI will exercise its discretion to control its issuance,” Aji said.

Espay, the only company to pass the central bank’s criteria this year, already works with several partners in the ecommerce space. It’s the payments solution used by MatahariMall, which exploded onto the scene last year as retail giant Lippo Group ventured into online shopping.

This post Go-Jek acquires payments startup as companies kick against sluggish regulators appeared first on Tech in Asia.

from Tech in Asia https://www.techinasia.com/gojek-acquires-ponselpay-indonesia-fintech-regulations
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