Gojek Indonesia has brought onboard Facebook and PayPal to join the likes of Google and Tencent to its roster of investors in its most recent fund raising exercise. This new investment aims to support Gojek’s mission to boost Southeast Asia’s digital economy, with a focus on growing payments and financial services in the region.
According to Facebook, Gojek's vision comes in line with its commitment to serving small businesses and bringing them into the digital economy. The investment will also look to support Facebook and Gojek’s shared goal of empowering businesses and driving financial inclusion across the archipelago. In a blog post, Matt Idema, WhatsApp COO said the messaging platform currently helps small businesses communicate with customers and make sales. Together with Gojek, it can rope in more consumers and merchants.
According to Idema, the company also aims for future collaborations in Indonesia to support the country’s digital economy. Meanwhile, Gojek’s payments business, GoPay, has long been focused on increasing access to the digital economy among micro, small and medium enterprises (MSMEs), the majority of which continue to rely on cash to operate, due to the region’s large unbanked population. The latest influx of funding aims to support more of these businesses as they seek to digitise further, from micro-merchants selling wares on the street side, up to large businesses looking to strengthen their digital payment infrastructure.
Since launching its app in 2015, Gojek has helped bring many merchants onto its platform, giving them access to more than 170 million people across Southeast Asia. Earlier in March 2020, Gojek reportedly raised US$1.2 billion in funding for expansion in its fight towards becoming the super app of the region, and budding heads with rival Grab.
“With this investment, Facebook can expand its digital payment and financial services to Indonesia and more broadly to the Southeast Asian market,” Forrester analyst Meng Liu said in a statement to Marketing, adding the payment sector is still under serviced and the opportunity in Southeast Asia’s emerging markets such as Indonesia is worth billions of dollars.
Meanwhile, Gojek will now be able to embed Facebook’s digital wallet offering (such as WhatsApp Pay) on its platform of lifestyle services across shopping, transport and more. This attracts consumers who are underserved by traditional banks and card networks, as it entices them to digital payments offered by Facebook in the future. “In the long run, if Facebook’s Libra plan is successful, there would also be a natural roll out of this inclusive cross-border payment offering to immigrant workers in the Southeast Asian markets as well, Liu explained. Liu added:
The deal is the first step to building the infrastructure to expand Facebook’s payment and fintech businesses in the region.
In addition, he was of the view some find that Alipay and WeChat Pay would be negatively affected by this Facebook-Gojek deal. He was however, quick to put that thought to rest as Alipay and WeChat Pay are mostly servicing Chinese tourists in the Southeast Asian markets, rather than servicing local consumers directly.
“Therefore it won’t impact their businesses significantly. However, this deal will definitely impact the businesses of GCash, a local digital wallet backed by Ant Financial, given the competitiveness of Facebook’s payment services,” he said. According to Liu, the expansion of Facebook’s digital financial services to Southeast Asia will not happen rapidly but will be a gradual process instead.
“The local regulators’ attitudes toward Facebook is critical, especially in terms of its usage of local consumers’ data and data privacy protection. Facebook also faces potential competition from Chinese tech giants such as Alibaba, Tencent and ByteDance, who may also increase their investments in Gojek as well or even try to acquire them,” he explained.
Meanwhile, Katie McClintock CEO, Insights Division, Kantar Singapore was of the view the Facebook-Gojek investment is a "clear move in to accelerate social commerce".
"Bringing together the social strengths of Facebook (especially Instagram, WhatsApp) combined with the commercial capabilities of Gojek to provide last mile delivery and payment apps. Social commerce is a large and rapidly growing area across SEA and investment will support its scale up," she explained. McClintock also highlighted that the synergies are also evident, saying:
For Facebook, it's a good opportunity to commercialise its platforms, particularly the opportunity to move WhatsApp into the payment space.
With this investment boosting Gojek's standing in the sector, she added Grab would need to look at upping its social commerce game and whilst adoption of its platform is strong, and the payment system works well, it lacks the social networking link.
"Amazon has also being showing rapid growth in the region, however this move by Gojek further strengthens the home growth offer across the region," she said, adding:
It is a great move for Gojek. It helps them integrate their value chain and bring focus to their offer. A key watch out will be around privacy and security as these platforms continue to evolve.
Recently, the Facebook-Jio deal was in the news internationally as the social media giant will reportedly invest US$5.7 billion for a 9.99% stake in Jio Platforms, the digital technology arm of Indian billionaire Mukesh Ambani's conglomerate Reliance Industries. According to CNN, the partnership includes a commercial with WhatsApp that paves the way for Facebook to make money from the messaging service's 400 million users in India.