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Herman Suharto on appealing to the affections of Indonesia MSMEs: Profiles in Tech

The fintech stakeholder is cultivating a merchant-centric startup with Youtap Indonesia.

One of Youtap Indonesia's merchant-partner. Photo courtesy of Youtap Indonesia.

Last February, Youtap Indonesia launched its mobile payment services for the country’s entrepreneurs. Led by CEO Herman Suharto, the fintech company aims to assist large corporations as well as micro, small, and medium-sized enterprises (MSMEs) in growing their business.

Suharto is not a new name in fintech. Prior to joining Youtap, he was the general manager of digital payment and banking product development in one of Indonesia’s biggest telecommunications providers, Telkomsel. During his time there, he was tasked to develop the company’s digital payment service, T-Cash, which was rebranded as LinkAja in 2019. It was one of the early birds in mobile payment systems in Indonesia.

Passionate about Indonesia’s booming fintech industry, and eager to dive further into the sector, he decided to leave Telkomsel in late 2018 and joined Youtap. “I have predicted that the digital service market in Indonesia will continue to grow, especially digital financial services. Along the way, I saw that this market is interesting and challenging,” he told KrASIA in a recent interview.

Youtap Indonesia CEO Herman Suharto (right) posing with a merchant-partner during a visit. Photo courtesy of Youtap Indonesia.

When promoting and developing T-Cash across the country, Suharto realized one thing: Most service providers only catered to customers’ needs, and did not focus on the merchants. The Indonesian Ministry of Cooperatives and SMEs noted that in December 2018, there were 64,2 million MSME units contributing to more than 60% of the nation’s GDP. However, according to a McKinsey report published in the same year, only 15% of them have online ordering and payment systems. There are still tens of millions of micro and small business players that are untouched by fintech. For observant players, these businesses make for a lucrative market.

Seeing this untapped potential, Suharto was motivated to provide technology that helps merchants with managing and scaling up their businesses. In early 2018, he met with representatives from Indonesian conglomerate Salim Group and Youtap Global. “They also wanted to focus on services for merchants and welcomed my ideas. So I made up my mind to leave Telkomsel and join Youtap at the end of the year,” he said.

Youtap Indonesia, a joint venture between Singapore-based Youtap Mobile Money Asia Private Limited and Indonesian conglomerate Salim Group, provides point of sale services that comprise various features—payment systems, inventory management, sales reporting and analysis, as well as customer loyalty and progress insights. The startup has also partnered up with popular e-wallet services such as LinkAja, Dana, Ovo, GoPay, and ShopeePay.

Youtap’s features are all available in an Android app, but sellers can also purchase the company’s proprietary electronic equipment that offers the same functionality.

The company’s platform has been unofficially operating in Indonesia since 2019. It has been adopted by businesses large and small, including McDonald’s and 1,000 MSMEs across the country’s most populated island, Java. In 2020, Youtap Indonesia has set a sky-high goal—to partner up with 1 million merchants.

Hitting this mark will not be an easy task, as the firm has to compete with early players in the field, such as Moka and Pawoon. However, Suharto has a trick up his sleeve to win over micro and small business players: emotional benefits.

“Features like sales recap, daily reports, and financial literacy are functional benefits. As for emotional benefits, they are now using smart technology to manage their business. They can show it off to their children or relatives, it gives them a sense of pride,” he explained.

Micro and small entrepreneurs often have a more sentimental, more human streak than what can be found in medium and large businesses. They don’t use necessarily numbers to measure the success of their business. Instead, they may have abstract goals, such as earning enough to pay for a pilgrimage to Mecca, or to save up enough to marry off their children.

Most small business owners also tend to run their businesses based on instincts. “I met an owner who earns more than IDR 30 million (USD 2,030) per week, but never monitored it. He never realized that it equals IDR 120 million per month until I told him,” Suharto said.

Once they are able to keep track of and plan out their financials, small-scale merchants can establish a baseline and make goals to grow their revenue each month. In order to help them reach their goals, Suharto assigned a customer service team to look over each region. The teams assist merchants by providing marketing tips in person or via WhatsApp. Suharto believes that in order to help MSMEs scale up, tech companies can’t just throw equipment or apps at them and then leave. They have to stick around and guide these merchants toward growth by catering to their needs.

“I believe this is what makes us different from other players, we also provide non-tech support for the merchants and form a personal bond with them like friends,” he said.

The plan worked. Just a month after their official launch, Youtap Indonesia managed to double their number of merchant-partners and attain a 60% active rate.

Suharto still has many plans for Youtap Indonesia, as he recognizes that the fintech market still has plenty of space for growth, with many MSME merchants to tap. Compared to a few years ago, when he developed T-Cash, the conditions are much more robust now, as most of Youtap’s target clients are more aware of digital financial services, and they are supported by proper digital infrastructure.

Moving forward, the company plans to release more features, such as a logistics distribution chain service, with support from Salim Group. Using the firm’s vast connections, they also plan to add new services that will connect small entrepreneurs with banks, facilitating access to capital. They will also continue to work closely with merchants to gather data for other developments.“I envision a future where when people plan to start a business, they will use Youtap. They only need to think about what product to sell, and Youtap will take care of other problems,” Suharto said.

This article is part of “Profiles in Tech,” a series by KrASIA that highlights the achievements of people who are the driving force behind South and Southeast Asia’s tech startups.