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Payfazz and Xfers form Fazz Financial Group to take on Gojek and Grab

Written by Ursula Florene Published on     2 mins read

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The new group is targeting the 290 million unbanked in Southeast Asia.

Indonesian fintech platform Payfazz announced on Thursday that it invested USD 30 million in Xfers, a Singapore-based payments infrastructure company. As part of the deal, both firms also formed a new entity named Fazz Financial Group (FFG).

Xfers founder and CEO Tianwei Liu told KrASIA that the two startups have been working together since 2020, supporting over 250,000 agents across Indonesia. Going forward, Xfers will serve as the B2B arm of FFG, focusing on linking external merchants to the group’s payment infrastructure and user network.

The main target will still be Southeast Asia’s unbanked population. According to a report by Fitch Ratings, Southeast Asia is home to an unbanked population of about 290 million. Although the pandemic has increased digitally-driven financial inclusion in the region, the untapped potential remains enormous.

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In Indonesia, FFG will compete with larger players such as Gojek and Grab, which has started to provide similar services for street stalls and micro shops—known as warung—since last year. Gojek launched a new website for MSMEs with a range of digital solutions from Gojek’s ecosystem including the business management application GoBiz, e-wallet GoPay, and e-commerce service GoShop.

Grab, meanwhile, introduced GrabMerchants, an all-in-one platform for MSMEs providing services such as wholesale grocery procurement, marketing features, and payments via Ovo. FFG will also face Xendit in the payments space, along with Kredivo, Modalku, and KoinWorks in lending.

FFG plans to release two new features to increase its competitiveness. The first one, Liu said, will be a self-serve payment point for Singaporean merchants. The second a single-integration solution for brands and fintechs looking to enter Southeast Asia.

“Southeast Asia has a fragmented local payments landscape, even within each country. Consumers are used to a range of alternative payment methods,” Liu said. Yet, when entering a market, especially for direct-to-consumer industries, payments are the necessary entry and growth channel to acquire users, he explains. “Having a single-integration for alternative payments methods in Southeast Asia, enables brands to expand within the region in a more scalable and quicker fashion.”

One single account

Once launched, businesses looking to enter Singapore or Indonesia can accept or send payments in the respective countries’ local currencies with just one single Xfers account. “A business will no longer have to navigate complex regulation or license handling and technology development individually for each country,” Liu added.

Established in 2016, Payfazz helps small shops in Indonesia become a branchless banking agent, distributing banking services to the 180 million unbanked within the country. The company claims to have more than 250,000 registered agents spread across rural areas in 514 districts in the country, serving more than 10 million monthly active users in 2020. The company earns revenue from two core businesses: a 0.5% to 1% commission on every transaction from its agents, and between 4% and 10% per year from lending partners using their service.

In July 2020, the company raised USD 53 million in a Series B round co-led by B Capital and Insignia Ventures Partners, with participation from Tiger Global, Y Combinator, ACE & Company and BRI Ventures.

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