Payfazz closes $53m in series B round

Payfazz, a startup that provides financial and payment services through agents, just raised US$53 million in series B funding.

The round was led by B Capital Group and Insignia Ventures Partners, along with existing investors Tiger Global Management, Y Combinator, ACE & Company, and Quiet Capital. New backers such as BRI Ventures – the venture arm of the biggest bank in Indonesia – also participated.

The company will use the fresh capital to strengthen its ecosystem of financial services in Indonesia’s rural economy and explore new opportunities across Southeast Asia.

Payfazz team / Photo credit: Payfazz

Payfazz’s app helps users buy prepaid phone credit, pay electricity bills, and top up mobile wallets through an agent. The platform currently has a network of more than 250,000 active agents. Payfazz also claims that about 10 million Indonesians make transactions via its agents every month.

Since its inception in 2016, the Jakarta-based company has expanded its offerings to include more financial services like peer-to-peer lending, a point-of-sale system, and a freelancer marketplace.

Payfazz is the first Indonesian startup to join Y Combinator, attending the accelerator program in 2017.

What problem is it solving? Most people in Indonesia don’t have access to financial institutions. According to a 2019 report by Google and Temasek, 92 million out of 181 million adults in the country don’t have a bank account. Moreover, 50% of those with a bank account don’t have access to additional services like lending, investment, and insurance.

Payfazz wants to bridge the gap between banks and people through its agent network. It started by providing popular features like buying phone credit and paying bills to quickly attract agents and users, then it ventured into other services such as lending.

According to a PricewaterhouseCoopers report in 2018, around 74% of middle- to low-income individuals and micro, small, and medium enterprises in Indonesia have no access to loans.

What’s its traction? In 2019, Payfazz processed US$1.2 billion in annual transactions, up from the US$250 million it recorded in 2018. It earns a 1% commission for each transaction completed on the app.