A host of regional venture capital firms have quietly made early-stage investments into two rival interbank money transfer platforms in Indonesia, said sources privy to the development.
While Sequoia Capital is understood to have invested around $3 million in fintech startup Flip in March, a group of investors including Agaeti VC, Wavemaker Partners, Pavilion Capital, MDI Ventures and Central Capital Ventura backed a seed round for newcomer OY! late last year.
When contacted, Sequoia declined to comment on the investment, while separate emails sent to Flip and OY! did not elicit any response.
Flip, headquartered in Depok, was established in 2015. It enables users to transfer funds between different banks for free in a market where people typically have to pay a processing fee of about 6,500 rupiah ($0.46) for interbank transfers.
The startup, considered a pioneer in the free-of-charge digital bank transfer game, currently works with 14 banks. It creates accounts in multiple banks, thereby connecting itself to the banks’ API to facilitate fund transfers for a larger number of people for free. It reportedly has facilitated transfers worth close to 7 billion rupiah ($470,200) to date.
Its rival OY!, meanwhile, launched its bank transfer service late last year even as it was set up in 2017.
Co-founded by former Gojek vice-president and aCommerce manager Jesayas Fernandinus, OY! started its operations by enabling users to perform money transfer for free. However, of late, it has started monetizing its services, by charging 2,000 rupiah for interbank transfers of more than 5 million rupiah – still much lower than the market rate.
OY! caters to enterprises, offering products such as disbursement APIs, bulk disbursements, payment checkout and payment collection service via SMS.
The funding into the startups signals growing investor interest in the overall fintech sector. While Flip and OY! do not currently have direct competitors in the market, there are a host of industry biggies that have expanded their services to foray into the free bank transfer space to cash in on early boom days.
Some of the country’s lenders that have rolled out bank transfer services over the past year are BTPN, and mobile payment giants GoPay, OVO and DANA. However, all of them come with limitations and have included a cap on the number of free transfers that customers can avail per month.
Flip made headlines last year when it raised an undisclosed amount from Singapore’s Insignia Ventures Partners to facilitate its expansion plans.
In an interaction with us, Insignia confirmed that it was Flip’s first institutional round, but declined to comment on Sequoia’s recent investment in the startup.
“Flip was an early player in Indonesia’s fintech space, and while the digital banking industry in the country has changed rapidly in the last five years with more players, Flip has developed a deep understanding of its users (and has essentially grown with them) and the market,” said Insignia managing partner Yinglan Tan.
Following the investment by Insignia, Flip launched two paid services: BigFlip, which caters to the bank transfer needs of enterprises, and FlipInstant which caters more to customers who are willing to pay more for speed.