This CEO is building the “Google Play of financial services” for Indonesia

Paytm was founded in India 10 years ago as a top-up platform for prepaid mobile and direct-to-home TV. It has since expanded to ecommerce and retail payments, flight booking, money transfer, and investments. Today, it is one of the most popular payment brands in the country with over 140 million monthly active users.

Meanwhile, in Indonesia, the four-year-old startup Payfazz is blazing a similar trail. Starting as a mobile recharge and bill payment platform, it has since launched various financial products, such as point of sales (PoS), lending, and even loan management, either on its own or through affiliates.

Hendra Kwik, CEO of Payfazz / Photo credit: Payfazz

The difference is that Payfazz doesn’t tap end customers directly but through a network of offline agents. This enables it to reach unbanked people who can meet the agents, ask them to execute any kind of transaction, and pay with cash.

The company claims to have processed US$1.2 billion in transactions in 2019 and to be on track to get US$2.2 billion in annual transaction volume despite the pandemic, taking a roughly 1% cut of payment volume as revenue. It has just bagged US$53 million in series B funding led by B Capital and Insignia Ventures Partners.

However, Payfazz faces intense competition. Gojek, Grab, Tokopedia, and Shopee have become prominent players in the bill payment, money transfer, and even lending businesses. With each of them having their own abundant cash supply, these unicorns have been able acquire users through heavy advertising and by offering discounts.

But Payfazz believes it has an edge in Tier-2 and Tier-3 cities where people still need — and prefer — the human touch. That’s where the startup’s agents come in.

“We don’t usually have a direct competition with the unicorns when dealing with agents, except for Mitra Bukalapak,” Hendra Kwik, CEO of Payfazz, tells Tech in Asia.

That said, it’s just a matter of time before big companies like banks and unicorn startups begin to encroach on that market — and Payfazz is preparing for that.

Staying on the road

According to Google and Temasek’s 2019 e-Conomy report, 51% of Indonesia’s 181 million adults don’t have a bank account.

To reach these people, Payfazz has built a network of offline agents comprised of both individuals and stall (warung) owners who can help people conduct financial transactions and receive payments in cash.

“You need customers’ trust to enter the financial market. That’s why we started with mobile recharge and bills payment because these are the transactions that unbanked people usually do,” Kwik says.

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