In the past years, there is a rising trends of startups and companies which aim to digitize traditional retail merchants a.k.a Warung.Kudo pioneered this back in 2014. They then acquired by Grab in 2017, and recently rebranded into GrabKios. Next is E-commerce unicorn Bukalapak who dove in in this space big time by launching Mitra Bukalapak in 2017. Mitra Bukalapak is estimated to have 3 millions registered user which makes them market leader in digital warung. Tokopedia followed on by launching Mitra Tokopedia in 2018. There are also smaller players such as East Venture backed, Warung Pintar, KiosOn and Payfazz.
This warung trend apparently not only happening in Indonesia. Amazon last week just announced their move to partner with thousands of kirana store, Indian version of warung, to be used as delivery hub. Jeff Bezos himself came down to India to launch this. There is also Mastercard which enabling multiple initiatives to digitize mom-pop store in Latin America.
In this article, i dive into the reason why the trend is happening and which direction will warung digital going to go in the near future. Lets go!.
LinkAja has officially grand-launched last June. It represents collective efforts of Indonesian BUMN (state-owned enterprise) to gain market share in emerging digital payment space. Clashing with the likes of Gojek, Grab-backed OVO and Alibaba-backed DANA.
Things are not starting smoothly for them. The grand launch has been delayed couple of times due to technical issues, experts doubts their agility to compete and they’ve slouched to 4th place below DANA. Even though a year ago, T-Cash was fighting head to head with OVO to gain 2nd place.
So whats the move going forward ? Heres my quick thoughts on how LinkAja can win
Non-Smartphone Features
Gopay, Ovo and DANA all require smartphone to use. On the other hand, telco-based wallet such as T-Cash can be operated from dumb phones using USSD command. LinkAja can leverage this to offer more inclusive experience.
To process payments, user can just provide their mobile phone and approve payment via sms-delivered OTP. This could be beneficial to push LinkAja usage in rural areas where mobile internet coverage is spotty.
Digitizing Government Payments
In my experience, government payments are mostly in cash. From paying traffic fines, renewing your driver license or paying annual vehicle tax, LinkAja could be leveraged to make all of this cashless. Toll-road, Commuter Line and TransJakarta has been successfully converted to 100 percent cashless hence its not impossible to expand this into any sort of government payments.
For government institutions, cashless payments could make their payment processing more efficient and reduce fraud as well. This could be incentives for policy makers or public institution leaders to push LinkAja adoption in their organization. LinkAja could capitalize this putting registration and cash-in booth on every government institution that accept cash payment.
Leveraging Combined User Base
LinkAja is an evolution T-Cash. Telkomsel has 100 million existing user base. There also four state banks backing LinkAja up : Bank Mandiri, BNI, BRI and BTN. The four combined (also known as HIMBARA) represented almost 200 million accounts. Not to mention user contribution from Pertamina and Jiwasraya.
As i mentioned in my previous article, massive user base dont mean much if there are no clear benefits for Telkomsel or HIMBARA to use LinkAja over other wallet provider.
Good example of this is initiative to link integrate current account to LinkAja balance. Hence if you are one of HIMBARA bank users, you dont have to constantly top up, just link your account and LinkAja app could substitute your card as payment method.
Another ideas might be to use LinkAja as easier method to do peer to peer transfer. User can transfer money from any of HIMBARA bank to any mobile phone number since primary identifier for LinkAja (0r any other wallet) is mobile number.
Loyalty points is another angle that state owned enterprise could collaborate with LinkAja. Points from Telkomsel top-up, Pertamina petrol station, any payments from HIMBARA banks will be consolidated in LinkAja.
The key is to make the experience using LinkAja much much better for existing BUMN customer base compared to non-user. If its not, then LinkAja would not have advantage over other big 3 wallet provider no matter how many state enterprises backing them up.
Yesterday, Facebook launched its own global currency called Libra. It is built on blockchain and it carries Facebook ambitious bet to redefine how money works in the internet (you can see it in this video). Theres lot of interesting aspects of Libra, from its underlying technology, the management model and privacey features. TechCrunch explain it beautifully in this 4000 words explainer.
Explainer of main use case of Libra. You can watch the video here
My key takeaways from Facebook Libra are these :
Libra is crypto-based digital currency. It is a cryptocurrency hence decentralized, open and secure. However, unlike other cryptocurrency, it is blazingly fast (1000 TPS compared to 7 in Bitcoin and 15 in Ethereum) and financially stable due to the backings of real-money reserve. To use Libra, you will need Calibra, its digital wallet. You can cash-in, store, send and cash-out in Calibra similar to Paypal, Gopay, OVO and other digital wallet. However, Calibra will seamlessly handle multi-currency remittance, available around the world and integrated with FB Messenger and Whatsapp. Calibra itself is built by Facebook however since Libra is open infrastructure, in the future other companies might built other wallet apart from it.
Libra is mainly targeting unbanked population. In the intro video, Libra is designed to be fast in Lagos, simple in Manila and convenient to send money to Mexico City. To use Libra and Calibra, user only need feature phone, internet and any kind of government-issued identification. It doesnt require smartphone hence highly inclusive. Libra also claimed to utilize blockchain to drasticly reduce fees.
Libra is backed by lots of prominent organization. Apart from Facebook, Libra is supported by giants and whales of global institution. Visa, Mastercard, Paypal, Stripe are onboard. Theres also telco (Vodafone), venture capital (Andreesen-Horowits) and non-profits (Kiva and Mercy Corps). Full list of Libra backers can be read here.
This is an interesting slash scary things for fintech and crypto development going forward. If you work in wallet or digital money business, Facebook is eye-balling your lunch. Every penny that went into Calibra wallet is a penny less from other wallet. If youre in fintech focusing on unbanked, like me, this could be potential to do cashless financial service delivery. If you work in blockchain, Libra could be the key use case to bring the crypto to the masses. Global bitcoin users currently is 35 millions while Facebook itself has 2.3 billion userbase.
So considering this development, what can we do to anticipate? heres my initial thoughts :
This is series of study case analysis that i like to write from time to time. I am a big fan of Ben Thompson’s Stratechery and these essays are inspired by Ben’s work. Check out my last post on LinkAja.
On second week of April, Dealstreetasia broke the news that Indonesian payment wallet provider OVO has acquired online mutual fund startups, Bareksa, for 20 mio USD. This news came just merely a month after OVO acquisition of P2P Platform Taralite. Taralite acquisition has enabled OVO to offer credit-card-like Paylater which at the moment only available in Tokopedia. Bareksa on the other was used to power OVO Invest feature which can be accessed after user do advanced KYC by submitting their E-KTP.
Seeking information in OVO customer service booth. Pic credit from Metropolitan.id
As a country with massive unbanked population and asymmetric banking industry , Indonesia is a lucrative ground for fintech. These recent developments is a clear attempt to expand into wider financial services and having Lippo and Grab as their backer, OVO have ample warchest to start landgrab in multiple fronts.
In this essay, i will share my analysis on rationale, challenge and predictions on OVO next step in Indonesia financial industry.
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