Digital payments adoption is growing fast in Indonesia. The total value of e-wallet transactions increased from $3.2 billion in 2018 to $10.45 billion in 2019. And the pandemic certainly has accelerated the use of cashless payments. Thus, more e-wallet players are trying to grab a piece of the cake. As of December, the central bank has given its license to 52 electronic money platforms. One of the big players is LinkAja, which officially launched in June 2019 from a merger between e-wallet services owned by state-owned lenders and telco company. Led by Haryati Lawidjaja, LinkAja has made significant progress despite the competition and even thrived amid the pandemic.
Last year, LinkAja booked a 250% surge in revenue, and its transaction volume quadrupled. Now, LinkAja has more than 66 million registered users and partnered up with more than 1 million local merchants and 350,000 national merchants throughout Indonesia.
"I see the pandemic as a blessing in disguise. It wasn't easy to encourage and educate people to shift to cashless or digital. But during the pandemic, it is no longer an option," Haryati, or familiarly known as Fey, says.
With state-owned enterprises' support, LinkAja certainly benefitted from the network. These companies give priority to LinkAja as its cashless payment platform, for example, to pay toll roads, electricity bills, buy fuels. The company also secured the contract as the government's partner to disburse cash assistance to the pre-employment card program participants affected by the COVID-19 pandemic. Thus it naturally differentiates itself from other major e-wallet players like OVO and GoPay, which mainly facilitates F&B, e-commerce, ride-hailing, and life-style related transactions.
However, Grab and Gojek also recently invested in LinkAja. In November last year, Grab led the Series B funding worth around $100 million for LinkAja, allowing it to access the ride-hailing huge digital services ecosystem, including OVO and Tokopedia. GoJek also announced its strategic partnership with LinkAja through undisclosed funding last March. Fey says that Grab and Gojek can help LinkAja accelerate growth to increase financial inclusion in Indonesia with both's mature knowledge and technology.
Fey says LinkAja has a mission to extend financial inclusion, especially in the second and third-tier cities. According to a 2019 report by Google, Temasek, and Bain & Company, Indonesia still has around 47 million underbanked and 92 million unbanked adults, translating into a massive opportunity for fintech companies. The majority of households without access to financial solutions live in rural areas and provinces outside Java with sparse internet connectivity.
Over 150 million internet users are heavily concentrated in Jakarta and the country's secondary cities in Java and Sumatra. As a result, most fintech companies still only reach the urban and suburban population, while people who live in rural areas still lack easy access to financial services. The company's SOEs ecosystem also enables the bank to take on the chance. PT Bank Rakyat Indonesia, for example, has vast exposure in the Micro, Small, and Medium Enterprises (MSMEs) across the country, and telco company PT Telkomsel is known to have the widest network coverage including in the rural.
"I can say that our segment is different from our competitors. Others may be more towards lifestyle-related transactions, but we aim to help drive financial inclusion in Indonesia by providing essential payment services. That is reflected in our customer composition where about 73% of our users are from second-tier and third-tier cities in Indonesia," says Fey.
But despite the readily available supporting infrastructure, Fey says the lack of financial literacy in Indonesia poses the biggest challenge for digitizing the rural economy. Therefore, educating the public regarding digital financial platforms is significant homework, not just for fintech players in Indonesia. Cross-sector cooperation is needed to substantially impact financial literacy, which would lead to business traction in rural areas. LinkAja, for example, has become a partner for state-owned banks in channeling loans for MSMEs segments in Indonesia. This collaboration benefits the companies as they can expand into untapped new markets.
"Unbanked people tend to pay with cash and do not have any bookkeeping. It would be troublesome for the bank to track their behavior. LinkAja provides historical data on user's behavior that can be useful as credit scoring for the banks to improve its loan quality," she says.
Taking advantage of the SOE ecosystem doesn't mean that LinkAja stops innovating in products and services. With highway operator PT Jasa Marga, LinkAja has launched touchless payment technology using an RFID sticker that will automatically deduct the balance from the driver's account when the car passes through a scanner at the toll gate.
Moreover, LinkAja can be also be used at selected offline merchants in Singapore that accept payment via standard QR code. Fey states the company will not be relying on promotions and discounts to gain users; instead, it will focus on educating consumers and providing convenience.
Strive and Survive
Before heading LinkAja, Fey has extensive experience in various companies and state-owned enterprises. She started her career as a consultant at Arthur Andersen & Co in 1999 as a financial auditor. There, she met many clients from telco companies, and the experience in handling digital tools attracted her to pursue her professional journey in the field.
"When I was introduced to the digital world, I saw that technology could help provide access to information to people. Information can change how we see the world around us, where we are, and how to adjust our lives to maximize the benefits using the resources we have," Fey says.
She entered the telecommunications sector in 2002 as a product development specialist for PT XL Axiata before moving to several companies in the industry. Fey joined Telkomsel in 2014 as the vice president-mobile advertising. Her achievement in the advertising sector led her to sit as Director of AdParlor Asia Pacific in Indonesia.
Unfortunately, in 2016 she was diagnosed with stage 4B cervical cancer, which forced her to take a hiatus to focus on treatment. But the illness didn't stop her from doing all things she usually enjoys, including sports and solo traveling.
After finishing her chemotherapy sessions in 2018, she was back in her career. She joined PT Bank BTPN, where she contributed to building a digital banking platform, Jenius. Her self-acceptance and willingness to continuously learn have paved her way to strive in the Indonesian digital industry, mainly dominated by men. In her spare time, Fey likes to cook plant-based meals and take full marathons. She finished a full marathon in the Himalayas right before the pandemic hit