Two of Indonesia’s top fintech startups have agreed in principle to merge to create a stronger challenger to Gojek’s GoPay, according to people familiar with the matter, Bloomberg reported.
Digital-payments company OVO and digital-wallet provider Dana ironed out differences over valuations and structure as they aim to reduce cash burn, the people said, asking not to be named because the matter is private.
The signing of the deal was delayed because of the coronavirus outbreak and could happen soon after finalizing details, the people said. The terms and timing could change or the deal may still fall apart, they said.
If completed, the deal would help Grab compete with archrival Gojek on its home turf of Indonesia in digital-payment services. Both companies see digital payments as a crucial way to gain customers before offering them an array of financial products, which are aimed at helping the companies move toward profitability.
According to a recent report by Rapyd, Indonesian consumers strongly prefer e-wallets to cards and cash with 33.8 per cent choosing one of three e-wallets (OVO, Go-Pay or Dana) as their preferred way to pay.
Among these users, OVO is the number one frequently-used payment method with 69 per cent respondents claiming to have used it in the past month. It is also the country’s most preferred one with 17.8 per cent respondents choosing it.
In a recent interview with e27, OVO CEO Jason Thompson mentioned “a positive shift towards digital payment adoptions” in the Indonesian market as a result of the COVID-19 outbreak.
Indonesia’s e-wallet players have all been mired in a bruising battle for leadership, mirroring the fight in the ride-hailing industry in the past. OVO, which was started by Indonesia’s Lippo Group, is valued at $2.9 billion, according to CB Insights. Dana -- owned by Ant Financial and Indonesia’s media conglomerate Elang Mahkota Teknologi, better know as Emtek -- doesn’t publicly disclose its valuation.
Gojek is moving quickly to expand its digital financial services. Indonesia’s largest startup scored Facebook and PayPal as new backers and launched a new online gold investment service this month. Gojek’s app has been downloaded 170 million times and was the mostly widely used on-demand app in Indonesia in 2019, according to App Annie. OVO is present in 115 million devices.
Southeast Asia has seen a rapid adoption of digital finance since Grab and Gojek funneled some of the billions they raised into in-app payments and financial services. Other segments like lending and insurance remain in their nascent stages.
