New unicorn Xendit, rivals double down on regional play

Fresh off a US$300 million series D funding round, Indonesia-based Xendit is setting its sights on the rest of Southeast Asia. The payment gateway startup is eyeing Malaysia, Thailand, and Vietnam as potential new markets.

This expansion plan is based on Xendit’s growth in Indonesia and the Philippines, where it currently operates. After doing well in these markets, the company believes it has “a great chance of success in other countries as well,” Tessa Wijaya, COO and co-founder of Xendit, tells Tech in Asia.

According to the company, it has recorded 200 million transactions over the last year, with total payments value jumping from US$6.5 billion to US$15 billion.

For reference, fellow Indonesian payment gateway Doku processed 47 million transactions in 2020, with total payments value of US$2.9 billion.

Xendit founders (from left) Juan Gonzalez, Moses Lo, Tessa Wijaya, and Bo Chen / Photo credit: Xendit

But Xendit is not alone in pursuing expansion. Doku and Thailand-based Omise are now both available in Malaysia. Meanwhile, regional player Razer Merchant Services, which was previously known as MolPay, and global powerhouse Stripe are setting up shop in Indonesia.

Going regional might make more sense for Indonesian companies, considering the increasingly crowded space at home. While the country’s digital potential is still far from being realized, doing so would require getting into lower-tier cities and rural areas – not the easiest of tasks, as others in the tech industry have found.

Hurdles aside, Xendit may have more tricks up its sleeve. As its recent acquisition/investment spree suggests, a more diversified approach – such as a banking-as-a-service (BaaS) offering – may be in the works.

Regional battle

Indonesia’s payment gateway scene has several popular players, including Xendit, Doku, Midtrans, Nicepay, Faspay, and Xfers.

In terms of annualized transaction value, Xendit leads the pack with US$15 billion. That’s much larger than Doku’s US$2.9 billion, Xfers’s US$2 billion, and Nicepay’s US$1.8 billion.

Meanwhile, Midtrans’ numbers are not publicly available, but its parent GoTo Financial has a gross transaction value of 214.9 trillion rupiah (US$14.4 billion) in 2021.

Of course, the payments business in general is tightly regulated, and companies have typically expanded via investments in or outright acquisitions of other players who hold licenses in the target country. But this shouldn’t be an issue for payment gateway firms – they saw much growth amid the Covid-19 pandemic, which has led to a slew of larger funding rounds.

In the Philippines, Xendit invested an undisclosed amount into local payment gateway Dragonpay to strengthen its foothold.

Banking-as-a-service in the cards?