Will OVO be Indonesia’s next Unicorn?

After ride-hailing and e-commerce, the past year has seen the rise of Fintech in Indonesia.

Mobile wallet, payment apps, p2p lending, cryptocurrency platforms…all competing for a share of the cash carried around, in a country described as a fresh battleground for Fintech.

The fintech space has a been a battle zone for contenders from different industries: Traditional banks (Yap, Jenius…), Telcos (Paypro, Tcash..), fintech startups (Ayopop, Doku…) and ex-ride-hailing apps like Gojek and Grab.

Grab’s GrabPay didn’t live long, after failing to secure an e-money license, and left, literally, the streets wide open for GoPay…for a short while.

GoPay vs the rest of the world?

GoPay is a mobile wallet and a payment app: You can use it to order on Gojek, send money to other Gojek users, pay online on some platforms and pay in brick-and-mortar retail spaces using QR codes. In terms of technology, there’s no real breakthrough innovation but the strength of GoPay is in Gojek’s brand value and the network depth.

Gojek is everywhere. Their logos are on Helmets and jackets everywhere in the city, their investment in traditional and online advertising is visible (and of higher production value than their competitors often) and their brand is becoming a verb: You don’t send something or get it delivered, you “gojek” it.

Beyond visibility, Gojek invested a lot to make GoPay an easy payment method. It started with cheaper rides when used instead of cash, associated with (generous in % but small in volume) cashback in a range of physical stores and online platforms (BeinSports is one of them). They also transformed their loyalty program GoPoints into a voucher platform where, to get discounted vouchers, you can convert your points or buy them with GoPay.

The latest product on trial seems to be GoVend: a box placed in Gocar’s vehicle, selling small items, you can pay for using GoPay. (running on Cargo platform)

Gojek definitely has the funding to fuel GoPay growth ambitions and we expect more aggressive cashback incentives, discounted vouchers and a wider range of online and brick and mortar partners

But their efforts were recently matched by a serious competitor who replaced GrabPay.

Hello OVO.

Backed by Lippo group, OVO started as standalone payment app with an incredible advantage: being able to tap into the Lippo group companies, including malls across Indonesia, e-commerce platform mataharimall, homegrown coffee chain Maxx Coffee, cinema chains, department stores and others.

The first major breakthrough for OVO was their partnership with Grab, with the rebranding of GrabPay as “GrabPay, powered by OVO”.

With OVO becoming the official e-wallet for Grab, it finally managed to be part of people’s most important daily transaction: transportation. This integration was followed with a more aggressive campaign in brick and mortar retail store, in a similar fashion to GoPay: Cashback, discounts, and vouchers.

The second breakthrough is their recent partnership with Tokopedia, the leading online shopping platform in Indonesia and one of Indonesia’s 4 unicorns.

Tokopedia decided to discard their own payment wallet, for the same reasons than Grab, and integrate OVO in their platform to make it their payment platform.

With this new partnership, OVO is making a radical shift to a new position: They’re no longer a mobile wallet but the payment app at the heart of an ecosystem including online shopping, ride-hailing, food delivery, and brick-and-mortar retail, with few of the biggest and most prominent names in Indonesia.

This position is allowing OVO to catch-up on GoPay in two different areas: Branding and usage. In terms of branding, having the OVO logo on Grab and Tokopedia is worth big $$ for any brand, since it gives incredible visibility and trust. For usage, OVO is now simply the default app for two of the biggest platforms in Indonesia.

In a recent press release, OVO claimed to be leading in the cashless race in Indonesia. Any information in a press release is always to take with a pinch of salt, but this claim is not baseless: OVO claimed 60 million users (since it’s partnership with Grab) and now adding Tokopedia’s 80 million active users to the total since OVO is their default payment app.

Will OVO be Indonesia’s next Unicorn?

Money might be coming in OVO’s way

OVO is in a strong position in Indonesia’s fintech scene: being at the center of a solid ecosystem, with partners depending on you, gives a great opportunity to OVO as a brand and business.

Not only they can grow organically but they will benefit directly from Grab (They probably raised another round by the time this article was published) and Tokopedia’s growth. It’s this ability to tap in multiple channels with strong partnerships while being at the heart of everything that is crucial.

OVO seems like a good contender to attract the next big rounds of funding in Indonesia next year. If they’re looking for one.

That would give OVO an additional push to fund all the efforts to sustain growth, user acquisitions and retention: cash back, advertising campaigns, partnerships…

One might argue that a rational consumer would download all the apps available on the market and use them indifferently, according to the most interesting offer or discount. But users are not (always) rational and that’s where brands like OVO and GoPay would be really tough to challenge. The next contender would need to have real depth in user experience … and funding.