Indonesia’s e-wallet platform LinkAja, which was formed by a consortium of state-owned enterprises, officially rolled out its services on June 30 after a much-delayed start.
Having begun as a T-Cash e-wallet operated by Indonesia’s largest telco firm Telkomsel, LinkAja was launched to challenge the current domination of the top two private sector players, GOJEK’s Go-Pay and Grab-backed OVO.
LinkAja is an integrated e-wallet service that was created through a merger of the e-wallets of telco firm Telkomsel, and lenders Bank Mandiri, BRI and BNI. It is also backed by lender BTN, oil and gas firm Pertamina, insurance firm Jiwasraya and brokerage firm Danareksa Sekuritas.
The company said that the services are now available at over 150,000 merchants across the country, covering over 400 digital products, including internet, electricity payment, and voucher games. It has also partnered with 20 e-commerce startups.
Industry watchers feel that the backing from state enterprises may help the new entrant reach a wider audience but its progress may be hobbled by bureaucracy and fiscal prudence in the face of private players’ ability to burn cash in the pursuit of growth.
“Yes, it is true that our backers are highly-regulated by Bank Indonesia and OJK (Financial Services Authority), but we are optimistic we can be agile and launch innovative services,” LinkaAja chief executive Danu Wicaksana told DealStreetAsia in an interview.
LinkAja currently has 22 million users. By the end of the year, it targets to have at least 44 million users.
Too late to enter the market?
Danu dismissed any challenges pertaining to the platform’s late foray into the market.
“The analogy is Honda, Nokia and Blackberry. Those companies might have entered the market first, secured many users and built a lucrative business but what about now? We think it is okay not to be the first in the market because, in the end, our mission is to provide solutions to the masses,” he said.
Over the past few years, e-wallet platforms such as Go-Pay and OVO have been installed in millions of mobile devices in the country and can be used to pay for almost everything, including delivery, insurance, ride services, e-commerce transactions, and electricity bills.
“When you visit KFC, or Chatime [outlets], and you are about to pay, the very first question that you will ask is ‘Which payment service offers the bigger discounts?’ I mean, don’t get me wrong, we are still available in those merchants as a payment alternative, we are still offering discounts to customers, but we are not going to burn [money] without thinking. We want to play differently,” he added.
LinkAja is planning to offer a payment option for transportation as it handles the payment platform for commuter line service, MRT, integrated TransJakarta bus, and the train system.
Danu said state-owned companies and the government are working on a system to develop the infrastructure. It will be installed on related train and bus stations across cities and regions.
“The upcoming QR code technology is called CPM or Customer Presented Mode. In the near future, customers just need to open our app, and the machines will scan customers’ QR code, and they are good to go. You don’t need to use cards anymore,” he said.
Merchants currently use MPM or Merchants Presented Mode, where they provide the QR code and customers can then scan the system.
“Now, we are still waiting for Bank Indonesia’s nod as they are currently working on the regulation, and waiting for the infrastructure to be ready,” he added.
Bank Indonesia has launched the QR Indonesian Standard, known as QRIS, which will usher in a universal cashless payment system in the country.
BI has also been testing out QRIS in other countries, while it also collaborates with other startups to try out the service in Singapore.
Danu said what makes LinkAja different from the other players is its ability to implement cross-border transactions.
“We see there is a growing number of Indonesian tourists visiting neighbouring countries such as Singapore, Thailand, and Malaysia. And we want to cater (to them) and ease their payment needs through our service,” he said.
Last year, at least 3.02 million Indonesians visited Singapore, the second-largest population after Chinese tourists to the city-state.
Danu said Indonesian tourists will be able to pay for taxi service or even make payments to merchants through the LinkAja app. Bank Indonesia is currently assessing LinkAja’s plans.
“We should wait for Bank Indonesia’s nod on this as they would decide which country we can implement this first, which can be Singapore or Thailand. We are ready for this. The infrastructure is ready,” he said.
For its payment service to be available in Singapore, LinkAja has collaborated with VIA, a cross border payment alliance.
VIA, which is part of Singapore’s telco giant Singtel Group, is also present in Thailand, Japan, and is looking to launch in Malaysia.
“For Indonesian tourists in those countries, they just need to find a merchant who installed its national QR code with VIA logo,” he said.
LinkAja is operated by parent company Finarya. Danu said LinkAja is looking to raise funds in a Series B round next year and is open to foreign investment. He, however, did not divulge any details.
“We operate just like any other mature startup. When there is a fundraising plan, management would ask the existing investors first whether they wanted to top up their funds or they do not want to participate. If they back off, we will be looking for other prospective investors, but preferably state-owned enterprises or institutions,” he added.
“However, we are still open. The most important thing for us is how [the investors] can strengthen our business operation. Foreign firms can invest in us, but they might not able to own a majority stake in the company,” Danu said.
“We want to be an essential payment solution for Indonesians. Our mission is to make underbanked people access financial services,” Danu said.
He said LinkAja plans to launch a money market fund, similar to Yue Bao, which is backed by Alibaba-affiliate Ant Financial. As of March 2019, Yue Bao’s assets under Management (AUM) stood at $155 billion.
“We cannot tell you when the service would be launched as this is still a medium-term plan,” Danu said.
LinkAja will also collaborate with the National Team for Accelerated Poverty Reduction (TNP2K) to distribute social assistance funds to people who live in poverty.
“In the near future, people can access the fund through LinkAja app. We don’t need to distribute millions of cards. We expect to implement this in the fourth quarter this year,” he added.