Go-Jek buys 3 fintech firms to conquer Indonesia payments

Photo credit: Go-Jek.

Ride-hailing service Go-Jek, Indonesia’s first billion-dollar tech startup, has agreed to acquire three local fintech firms as it seeks to expand its grip on the digital payments market.

The deals involve Kartuku, a leading offline payments processing company in Indonesia; Midtrans, said to be the nation’s top online payment gateway; and Mapan, a community-based savings and lending network, Go-Jek announced in a statement today. The company declined to disclose the value of the deals.

Altogether, Go-Jek, which owns the mobile wallet Go-Pay, and the three companies process close to US$5 billion worth of credit and debit card transactions as well as digital payments for users, service providers, and merchants annually. Ecommerce spend in Indonesia this year amounts to over US$7 billion, shows Statista data.

“We are now taking Go-Jek to the next stage,” said its founder and CEO Nadiem Makarim.

The acquisitions – combined – are Go-Jek’s biggest so far, Makarim told Tech in Asia, and marks a significant step in the company’s plan to dominate the payments space, where it’s facing off against Southeast Asia juggernaut Grab.

Going beyond the Go-Jek app

Backed by investors KKR & Co, Warburg Pincus, and China’s Tencent, Go-Jek started out with rides, then later expanded into other on-demand services such as food and medicine deliveries, parcel couriers, cleaners, massages, and ticketing.

Now a household name, Go-Jek has 900,000 drivers, more than 125,000 partner merchants, 15 million weekly active users, and over 100 million transactions processed through its platform per month. That’s a fivefold jump from the 20 million transactions the company reported in June 2016.

While customers use Go-Pay to purchase Go-Jek services, Makarim previously said his goal was to allow people to pay for things outside the app system, like coffee and groceries. Today’s buys help fulfill that goal.

Kartuku claims to serve nearly all the top 100 enterprise retailers in Indonesia with its offline payment processing solutions, including point-of-sale devices. Midtrans, on the other hand, has tied up with more than 3,000 online merchants, processing their transactions through 18 different payment methods with a focus on fraud prevention. Both startups will work on getting Go-Pay accepted into their merchant networks.

Meanwhile, Mapan counts over a million families across 100 cities in Indonesia as members of its community-based savings and loan platform. The startup will help increase Go-Jek’s reach, particularly in rural areas where many of the latter’s services might not be widely available.

Fierce battle with Grab

Because it caters to the unbanked, Go-Pay plays a key role in Go-Jek’s continuous push in its home market and possibly new ones, Makarim had said.

Majority of Indonesia’s 260 million-strong population have no access to credit cards, while 64 percent have had no access to formal banking services for more than 15 years, according to a KPMG report.

Closest competitor Grab – also a unicorn and heavily funded – is betting on this space as well, although it seems to be playing catch-up with Go-Jek in Indonesia.

What lies ahead