Indonesian e-wallet Ovo launches lending product for small businesses

Indonesian digital payments firm Ovo has launched a new service aimed at providing micro, small, and medium-sized enterprises (MSMEs) easier access to additional financing, according to several media reports.

Photo credit: Ovo

The new service, DanaTara, gives MSMEs access to financing of up to 500 million rupiah (about US$35,600) with terms of up to 12 months. The submission process takes about two to five working days, according to the reports.

Ovo president director Karaniya Dharmasaputra said that the new product seeks to help small enterprises expand their businesses and better manage cash flow.

The startup also designed it to be easily accessible by making it available on ecommerce platforms like Tokopedia, Bukalapak, Lazada, and Shopee, Dharmasaputra added.

Tech in Asia reached out to Ovo for a statement and will update the piece if we hear back.

According to data from Indonesia’s Central Statistics Agency, the contribution of the country’s MSME sector to GDP has reached 60% in 2015. The sector also took about 97% of the national workforce at the same time.

Since 2017, Ovo claims that over 450,000 MSMEs have joined its ecosystem, falling in line with the 200% increase in electronic money transactions until July 2019. It also said that the increasing adoption of digital payments is expected to drive this business segment moving forward.

See also: How Ovo took off with a corporate innovation model that could challenge venture capital

Ovo, the top digital payment system based on transaction values, was initially launched as a loyalty app for shopping malls owned by local conglomerate Lippo Group, a major shareholder in the company.

The startup has closed deals to acquire online mutual fund marketplace Bareksa as well as lending platform Taralite to expand its reach into financial services.

Lippo has reportedly been paying Ovo US$50 million a month and offloading its stake in the fintech company as it could no longer fund it. Ovo, however, denied the claims.