Cleric-led Indonesian fintech firm says no to VC money as it takes on big boys

Great Mosque Istiqlal, Jakarta, Indonesia. Photo by Rezky Ramadhani on Unsplash

In the ultra competitive game of fintech where capital largely determines the winners and losers, one Indonesian startup claims to be breaking the norm and defying all odds.

Paytren, a mobile wallet and bill payment app founded by popular Islamic cleric Yusuf Mansur, says it has had no external funding since it started back in 2013.

In fact, according to Mansur, the company did not rely on any capital to kickstart its operations.

“There was no capital whatsoever at Paytren. None. I’m showing to the world that it happened,” he told DEALSTREETASIA.

To Mansur’s followers, this unconventional way of approaching business is not a surprise. The cleric, whose rise to national prominence came through his teachings on “the miracle of giving”, has been calling people to tame their over-reliance on money for all matters – urging them to, instead, turn to God.

“I don’t really know how to communicate this to those with an academic background, but that’s what I always teach: Even if you don’t have anything, don’t know anything, you can’t do anything, but you truly turn to God, you can be successful. That’s what I want to teach,” he said.

When pushed to explain how he started a tech company with zero capital, Mansur did not give a straight answer but offered a somewhat telling line: “You need to have trust and integrity. When you have that, you have more than money”.

As a preacher and teacher, integrity is something Mansur needs to live by. In fact, he says that his decision to jump into the deep end of the business is part of his way of walking his talk on reliance on and submission to God.

By some section of his followers, however, Mansur has been criticized for seemingly forsaking his role as a preacher in favour of becoming a full-fledged businessman having ventured into various sectors including fashion, property, travel, hotels, as well as food and beverage.

However, he maintains that all his ventures are part of an effort to help improve the economy of the Muslim ummah or community. Paytren, he says, does this through its agent and multilevel marketing model.

Apart from having a regular e-money service, through which users can make payments and carry out cashless fund transfers, Paytren also offers paid membership option for users who want to become agents and have the opportunity to earn some income by reselling products offered by the company’s merchant partners.

Moreover, paying members can also earn additional income by recruiting new members in a model that is similar to the multi-level marketing concept.

With Mansur as its full owner, founder, leader and icon, Paytren positions itself as a Muslim-themed and Sharia-compliant payment solution that targets the populous mainstream Indonesian Muslims. It tells its employees to perform optional acts of worship during work hours and asks its agents to give to charity regularly.

Despite claiming to have no CMO or marketing staff, Paytren has become popular among Muslims particularly in rural areas, largely owing to the fame of Mansur, who boasts over 2 million followers on Twitter and 3 million followers on Instagram.

“Though God’s work”, Mansur says Paytren has grown exponentially over the last few years. In 2018, Paytren had 1.8 million active users nationwide, which is just shy of the 2 million overall users claimed by its competitor Kudo, which has the backing of regional decacorn Grab and is regarded as the leader in the bill payments and O2O market.

Mansur says on average, the platform facilitated transactions worth Rp 3.7 trillion per month throughout 2018 – a year in which the startup suffered a lengthy period of suspension of its e-money service due to a pending Bank Indonesia license, he was quick to point out.

While the numbers appear impressive, they have not been officially validated by any third party. However, what is clear is that it has gained the attention of other players in the market.

In late 2018, Paytren forged a partnership with Southeast Asian ride-hailing unicorn Grab to empower the unbanked and disadvantaged society, as part of the latter’s “Grab 4 Indonesia 2020” master plan to advance Indonesia’s digital economy.

“Through the emergence of Paytren in rural parts of Indonesia, we expect it will accelerate Grab’s expansion, reaching 5 million micro-entrepreneurs across the country,” Grab had said at the signing ceremony.

Mansur has often vowed that Paytren will not be seeking investment, but be the one making investments. In the past year, the company has bought a minority stake in BRI Syariah (the sharia arm of state-owned lender Bank BRI), media firm Tempo and a number of football clubs, including top-tier Polish football club Lechia Gdansk.

The capital for these investments is understood to have come from Paytren’s almost 2 million agents through a crowdfunding system. Going forward, the firm is expected to make even more investments after it set up Paytren Asset Management which claims to be the first sharia-compliant investment manager in Indonesia.

For the moment, however, the focus for Paytren will still be on its fintech business, which Mansur says will grow almost tenfold this year.

“We believe in 2019, we can reach over 10 million users, with average spending of Rp 2 million ($140) a month. So around Rp 20 trillion ($1.4 billion) a month,” he said.

To put Rp 20 trillion a month worth of transactions into context: Go-Pay’s total transaction volume throughout the whole of 2018 was Rp 87 trillion.

Putting Paytren in the same bracket as the enormously funded Go-Pay may seem unreasonable, but according to Daily Social’s Fintech Report 2018, Paytren’s e-money brand is fighting up there with the heavyweights. The company managed to climb into the top five in terms of e-money brand popularity trailing Go-Jek’s Go-Pay, Grab-backed OVO, Telkomsel’s T-Cash and Alipay-backed DANA, according to the survey.

According to Mansur, the target of Rp 20 trillion a month will be made possible by the payment licenses the firm pocketed last year. Paytren was finally granted its e-money license in mid-2018 before obtaining a money transfer license (for QR code technology) at the end of the year.

As part of its expansion strategy, Mansur said Paytren is in the process of collaborating with almost 10 regional administrations to become their official digital payment solution. The partnership will see its e-money and QR code services being used at mosques, traditional markets, modern markets, schools, universities, Islamic schools, Islamic circles, canteens and hospitals in these regions.

“By setting up QR for mosques, for example, it means we are getting the congregation to use QR code too (for charity/donations). In Indonesia, there are 1 million mosques. If each mosque has 100 people, then there will be 100 million more users,” he said.

Mansur said he believes the strategy will put Paytren well on its way to reach its ambitious target, but emphasized that the company’s fate will ultimately be in God’s hands.

“The target for this year is Rp 20 trillion a month. I think it can already be achieved by mid-2019. It’s not something that is extraordinary. You know why this is easy? Because it’s not me that’s working to make it happen. It’s God. Our job is just to pray,” he said.

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