Stripe readies Indonesia entry, but the road just got rougher

Over the past year, Stripe – the most valuable private company in the US – has stepped up its efforts to enter Indonesia.

The US$95 billion Silicon Valley powerhouse has been in the market for early hires, targeting key positions such as legal counsel, key accounts manager, and Indonesia expansion partnership lead.

John Collision (left) and Patrick Collison, co-founders of Stripe / Photo credit: Stripe

More importantly, Stripe’s operations in the country – led by former Grab Indonesia executive director Ongki Kurniawan – has obtained a Bank Indonesia license. According to the central bank’s website, PT Stripe Payment Indonesia was granted the license in March 2020, and it has been placed in the financial technology category.

When contacted by Tech in Asia, Stripe says it prefers not to comment on its Indonesia plans for now.

Rolling out its core payment gateway business in Indonesia is no small feat for Stripe. In addition to more legal legwork, the company would be wiggling its way into a crowded space occupied by ambitious players that have recently received big capital injections.

Doku, for example, raised a US$32 million round from private equity firm Apis Partners in August. However, Xendit has taken fundraising to another level: After securing US$64.6 million in its series B led by Accel round in March, the Y Combinator graduate bagged US$150 million in its series C just six months later. The deal valued Xendit at over US$1 billion, catapulting it into the prestigious unicorn club.

Xendit founders (from left) Juan Gonzalez, Moses Lo, Tessa Wijaya, and Bo Chen / Photo credit: Xendit

Armed with fresh firepower, Doku and Xendit are set to double down on their growth. Following suit is Gojek’s Midtrans, whose transaction volume can amplify as its parent merges with ecommerce giant Tokopedia. Gojek bought Midtrans in 2017 for an undisclosed amount.

Rapidly growing payment pie

As a back-end solution, payment gateway companies naturally does not enjoy the same popularity as e-wallets do. While digital wallets are consumer-facing services, payment gateway players provides businesses with a tool that takes care of the transaction process from end to end, enabling them to accept payments in their selling platform, online or offline.

The recent substantial funding into Indonesia’s payment gateway space is unprecedented and brings renewed promise into the industry, which in the past has been a fairly quiet one. Prior to this year, Xendit’s last funding round was a US$2 million fundraise in 2019 – miles away from today’s stratospheric figures.

The boom of the industry over the past few years is reflected in the numbers. For instance, Doku says it processed 47 million transactions worth US$2.9 billion in 2020. Likewise, Gojek’s Midtrans reports a 75% hike in cashless transactions, while Xendit says its customer count increased by 540%.

Marginal margins

No plain sailing for Stripe