Indonesian media group EMTEK, the majority shareholder of the digital payment platform Dana, which is also backed by Ant Financial, is discussing a merger with its competitor Ovo which is backed by Southeast Asian ride hailing apps Grab, according to Reuters.
Ovo and Dana are Indonesia’s second and third most popular mobile wallets, trailing behind Gojek’s Gopay, so a merger might give the two a better shot at challenging Gopay’s lead in Indonesia’s multi-billion dollar online payments market. A recent regulatory change which requires all payment players to implement a national QR code standard which directs them towards interoperability may be another factor encouraging consolidation.
EMTEK is dismissing the report of a merger between Dana and Ovo as a “rumor” and says it will maintain its payment platform and plans to expand the ecosystem of partners further with additional use cases, such as in the transportation sector.“It’s normal that there are rumors like this,” Andya Daniswara, the senior vice president of business development at EMTEK told KrASIA. “We ignore such rumors, and continue to be focused in execution and growth of our business.” He pointed out that in other established markets, consumers use multiple electronic wallets. So there is room for multiple payment platforms to coexist, especially in a vast growing market like Indonesia.
Dana’s CEO Vincent Iswara told KrASIA he does not comment on “market rumors.”
Digital wallets in Indonesia have been seeing rapid growth in the past year, as more and more online merchants and stores are starting to accept e-cash payments from customers.
One key regulatory change regarding the use of QR codes, which are necessary for digital wallet transactions, may be affecting the way wallet operators view their potential market.
Indonesia just released–and by January 2020 will begin enforcing–its QR code standard QRIS, which directs all digital payment players toward interoperability. It also means individual players can no longer operate in silos.
“This means all payment instruments can be processed. For example e-money or debit cards from Bank A or non-bank players, these can all be processed by all merchants. Before [the standard] everyone did this for themselves. […] In the future, people will have one or two [digital wallets], there’s no need to keep many types of payments options […] just one or two, but you can use them anywhere,” Onny Widjanarko, the spokesman of Indonesia’s Central Bank (BI) told KrASIA. He said the Central Bank was not going so far as to recommend mergers, and did not comment on the Dana and Ovo case specifically.
According to data from BI there are 38 digital wallet apps licensed in Indonesia. In 2018, the total transaction from of e-wallet applications in Indonesia reached USD 1.5 billion, and it is estimated to reach USD 25 billion by 2023.