Can Xendit shrug off growing competition in digital payments?

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Hello there,

At this point, it’s obvious that startups are innovative while governments are largely the opposite. But during a chat with an executive in the fintech and ecommerce space last week, I was reminded of just how much influence governments ultimately have in the development of startups.

For a fintech firm choosing new markets for its expansions, navigating regulatory hurdles or payments licenses are a given. But the deciding factor can be as simple as whether a digital national ID system – such as Singapore’s MyInfo – is available.

Such a system would simplify know-your-customer processes to a single click. But not all governments necessarily have a digital national ID – or, at least, one as reliable as Singapore’s.

In Indonesia, digital payments are taking off at an unprecedented speed. According to Bank Indonesia, the volume of transactions that took place via QRIS, Indonesia’s QR code standard, grew by 237% between December 2020 and December 2021. Last year, the volume of electronic money transactions also grew by 49%.

Payment gateway firms, which help businesses to accept and process various digital payment methods, are well-positioned to benefit from this shift. But in countries like Indonesia, where the fintech potential is huge, would consumers in lower-tier cities and rural areas serve as prime targets?

In this week’s Big Story, Jofie unpacks Xendit’s expansion strategy fresh off a US$300 million fundraise, where – like its competitors – it eyes the rest of Southeast Asia instead of staying only in Indonesia.

Meanwhile, in this week’s hot take, I analyze Grab’s newly revised GrabRewards scheme that took effect on August 1. This is not its first revision and certainly not the last.

The update restricts the earning of its loyalty points to users who transact using the GrabPay wallet or card. Will it succeed in luring customers to switch from credit or debit cards?

– Melissa

(Note: The Top Up will be on hiatus next week as we head off to a company offsite in Bali. See you the week after!)

THE BIG STORY

New unicorn Xendit, rivals double down on regional play

Image credit: Timmy Loen

THE HOT TAKE

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