How LinkAja can help Grab and Gojek fend off ShopeePay

LinkAja has done something that Grab and Gojek couldn’t do themselves: Thanks to the Indonesian digital wallet, the rival super apps have laid down their arms and joined the same company as shareholders.

But LinkAja, which is backed by 10 Indonesian state-owned enterprises, is no ordinary e-wallet. Until now, many of its use cases have been out of reach for Grab, Gojek, and other fintech companies, for that matter.

Photo credit: LinkAja

“It’s highly strategic [for Gojek] to partner with rather than compete against or neglect the opportunity to tie in with LinkAja,” says Aldi Hartanto of MDI Ventures, the corporate venture capital arm of Indonesian conglomerate Telkom. (Telkomsel, another Telkom subsidiary, is a LinkAja investor.)

LinkAja could give Grab and Gojek’s transaction volumes a significant bump, and the connection could help them withstand the assault from Sea Group’s ShopeePay.

But the move seems to be a part of a larger trend in Indonesia’s fintech space. The Indonesian government, for one, is working to streamline the country’s digital payment systems, with LinkAja potentially playing a central role.

Big upside

A venture capitalist linked to one of the super apps says that while they are “quite surprised” to find Grab and Gojek’s common shareholding, it also makes sense given national interests and both companies’ relationships with the government.

LinkAja can provide Grab and Gojek access to whole new vistas. MDI’s Hartanto says that people choose payment methods based on three reasons: accessibility, affordability, and reliability. While digital wallets like Gojek’s GoPay and Grab affiliate Ovo might be able to tackle affordability and reliability by themselves, there are certain use cases controlled by specific parties, such as transportation (i.e., toll fees or MRT fares), gas, or municipal bills.

That’s why LinkAja has been dominant in Indonesia’s second- and third-tier cities – where about 80% of the e-wallet’s registered users come from – despite having the least capital compared to GoPay and Ovo, Hartanto adds.

The VC, who requested anonymity, also notes that there’s also no point for either Grab or Gojek to address the government use cases themselves. Doing that would require building new systems or getting permits. LinkAja, on the other hand, is already a viable option, complete with government buy-in.

The partnership also benefits LinkAja as it becomes a payment option in both the Grab and Gojek apps.

The commercial upside to these additional use cases is huge – it’s substantial enough to provide Grab and Gojek with an edge as they go toe-to-toe with ShopeePay.

Shopee can play that game, too