Ovo-Dana merger could be Indonesia’s most ambitious crossover event

The merger of Indonesia-based mobile payment services Ovo and Dana, which is reported to be in its final stages, would be the most concrete step toward a duopoly in the country’s digital payments landscape. But its implications could be even larger.

The much-anticipated move would thicken the battle lines between two coalitions, each a sprawling web of tech giants, massive family conglomerates, and popular consumer apps. It’s also a key chapter in a wider battle stretching across ecommerce, fintech, healthcare, and media, with Alibaba and Softbank on one side and Tencent, JD, and Facebook on the other.

The prize? The wallets and data of tens of millions of Indonesian consumers. To borrow the meme, this could be the most ambitious crossover event in the country.

Mobile payments is the key to connecting disparate industries, easing transactions, and collecting data on Indonesian consumers. But who has the edge on this front?

The narrative was that Ovo was the strongest offline – thanks to backer Lippo Group’s network of malls and hospitals – while the Gojek ecosystem gave GoPay a foothold online. But this isn’t the case anymore – Ovo’s online presence has been bolstered by its partnerships with Grab and Tokopedia.

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Meanwhile, GoPay stands to benefit from its recent funding round, which saw investment from PayPal and Facebook. The latter also plans to move into ecommerce and payments to tap into its strong user base in Indonesia.

While the merger has not yet been finalized – largely due to regulatory issues – it appears that a duopoly (and the mergers needed to get there) will happen sooner or later.

A powerful combo?

An Ovo-Dana merger could present a united front. Multiple third-party research reports identify GoPay or Ovo as the current market leaders in Indonesia’s e-wallet space. But based on Bank Indonesia data viewed by Tech in Asia last September, Ovo accounted for 37% of total digital payment transaction values in the first six months of 2019. Assuming that the figures still hold true, Ovo-Dana would represent almost half of transaction values in the country at 47%, or US$1.86 billion.

Gojek disputes these figures, however. While Bank Indonesia’s methodology was not disclosed, the numbers appear to be self-reported by each company and submitted regularly to the regulator for oversight purposes.

Conserving fuel

Mix and match

GoPay’s secret weapon?

Keep an eye on Shopee and Traveloka

Blockage on the highway