This article was originally written and published in Chinese

As we explained in an earlier article, the mobile payment landscape is now dominated by four major players: OVO, GoPay, Dana and LinkAja. 

In addition to their background, use cases and capabilities, cashback and subsidies also played a major role in the ascent of these four. 

That said, investors will eventually ask the hard question: when can we make back the money burnt? And when the marginal return of these subsidies diminishes, some shareholders are looking for some change. 

What would happen next? Who would remain and eventually win the game?

The case of OVO 

Lippo has…

This article was originally written and published in Chinese

As we explained in an earlier article, the mobile payment landscape is now dominated by four major players: OVO, GoPay, Dana and LinkAja. 

In addition to their background, use cases and capabilities, cashback and subsidies also played a major role in the ascent of these four. 

That said, investors will eventually ask the hard question: when can we make back the money burnt? And when the marginal return of these subsidies diminishes, some shareholders are looking for some change. 

What would happen next? Who would remain and eventually win the game? 

The case of OVO 

Lippo has diluted its share in OVO to be less than 15%, with Grab becoming the biggest shareholder and Tokopedia the second biggest. Lately, some securities brokers in China have been selling Lippo’s existing shares in OVO. 

OVO and its stakeholders

This gives Grab a better hand to build the OVO payment ecosystem, together with its super app vision. It is reasonable to assume the integration of Grab and OVO will deepen, forming a very interesting ecosystem. 

OVO has the best natural combination of use cases – ride-hailing and food delivery (via Grab), C2C e-commerce (via Tokopedia) and offline retail (via Lippo). A recent study claims that OVO dominates Indonesia’s digital payment market. It’s a combination of payment, loyalty system and credit services would put it in a good position if executed well. There are some interesting insights from a recent DealstreetAsia article about OVO’s positioning and priorities.  

Aside from Lippo, it is alleged that Emtek, Ant Financial’s JV partner in Dana, is also seeking other investors to take over some of its stake in Dana. Amongst all the Ant e-wallet JVs in Southeast Asia, Dana is probably the smoothest in terms of product and technology – its JV partner does not have either the capabilities nor pre-existing payment/wallet products. That allowed Ant Financial to exercise its technological prowess to its best. 

Dana greatly resembles Alipay

LinkAja will be there 

Recently GoJek announced an integration with LinkAja, a joint initiative by Indonesia’s largest consumer-facing SOEs. By the time of the announcement, the integration was not yet available. Interoperability and settlement have been an issue discussed amongst players for a while – in the Dealstreetasia article mentioned above OVO expressed it would integrate with LinkAja as well. 

To bring that under control and in good progress, the role of the central bank is critical. China built its settlement network for mobile payment long after Alipay and Wechat achieved duopoly, while Singapore, India and Thailand have made varying degrees of progress to build a central settlement network for mobile payment. 

It is reasonable to expect the same for Indonesia. 

Will GoPay be spun off? 

GoJek has created GoLife to include services including GoMassage, GoClean, GoAuto and GoGlam. Of course, these entry points still exist on GoJek main app. However, users will be reminded that they could download GoLife. 

If experiences from Alipay are to be followed, it is not hard to imagine a separate GoPay app that bundles use cases even those not offered by GoJek. Although GoJek has denied this possibility, with more strategic partners, including Visa, joining, things might evolve. 

Grab has already muttered that it was considering spinning off its financial services to raise money separately. As Grab is better funded than GoJek, the latter might consider some good adjustment to continue fighting. 

New players

When the four are dominating, many others are still there. Even new players are joining the mess. AirAsia recently announced that it would extend its BigPay, which is already available in Malaysia, to the Indonesian market. The license application is already in progress – although nobody could give a timeline. 

BigPay ad at Kuala Lumpur Airport

Although AirAsia has relatively good quality users (those or everyone who can fly), its own use cases are limited. If it were serious to grow the business, it would still lag behind Touch N Go (which every driver has, and which has a JV with Ant Financial for mobile wallet) or Boost (from the telco). 

A shopfront in Malaysia

In Indonesia, AirAsia’s coverage lags behind Lion, especially in domestic flights. 

Lion Air routes

Various research reports are either saying the e-wallet payment only occupies 2.1% market share (BI), or it would grow from US$1.5 billion to US$25 billion by 2023 (Redseer). We believe the leading players will consolidate, but new players will keep coming.

 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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