This startup could unlock ecommerce growth in Southeast Asia

Photo credit: Bindalfrodo.

Ecommerce in Indonesia is still only scratching the surface of its potential. One factor holding it back is the lack of trust in online transactions, a BCG study found. Potential shoppers are just not convinced that what they’ve paid for online actually arrives at their doorstep. They are particularly anxious about spending larger sums.

Checkout is reduced to a two-click process.

A Singaporean startup called FinAccel came up with a two-pronged solution to that problem: It lets you buy things online on credit, so no money is transferred before the product arrives. You can then pay in installments, which helps further alleviate doubt because you don’t have to commit to a large investment at once.

This concept convinced Jungle Ventures to lead a seven-digit seed round in the company, which just launched to a wider audience today. Other investors in the round are GMO Venture Partners, AlphaJWC Ventures, 500 Startups, and a slew of angel investors.

Real-time credit scoring

FinAccel integrates with third party online stores through a product called Kredivo. Checkout is reduced to a two-click process, according to co-founder and CEO Akshay Garg.

“Once approved, you can check out just by entering your mobile number and six-digit passcode,” he explains. The transaction with the merchant gets confirmed right then and there, so the merchants can ship the product right away.

FinAccel doesn’t foot the bill itself. It’s partnering with professional credit institutions. What FinAccel offers its credit partners is a real-time credit risk assessment. That means if a buyer chooses to check out of an ecommerce store with Kredivo, it runs a background check on the buyer, aggregating information from a variety of signals. In Indonesia, the startup’s launch market, its partner is the local multi-financer BFI Finance.

FinAccel’s credit scoring algorithm considers 1,000 different variables.

Akshay says about 1,000 different variables are considered, including self-reported data about income, employment, marital status, but also social network data like how often someone posts, how many friends you have, what type of phone you use and so on.

“Not all applicants qualify. We’re currently approving about two thirds of applicants,” Akshay says. A definite rejection criteria would be if someone had a history of gambling, but there could be multiple small reasons for someone to get rejected.

“The cause for rejection comes down to one of two reasons: either we believe that you don’t have the financial ability to pay back a loan, or that you won’t be willing to pay back,” Akshay explains.

Ecommerce platforms love the product already

At the time of its launch, Kredivo is integrated with nearly 20 merchants. One of them is Jualo.

“We’ve been using their solution for a month now and we love it,” says Jualo CTO Ahmed Aljunied. “This solution works really well because the first month is interest-free.”

Learning from defaults