Facebook, PayPal look towards South East Asia for digital payments
By MYBRANDBOOK
Facebook and PayPal have invested in Gojek; Indonesia based app for food, shopping, commuting and making digital payments, in aim to cement their position in the fast-growing digital payments market in Southeast Asia.
Matt Idema, Chief Operating Officer, WhatsApp, did not disclose the sum the company has invested in Gojek but said the move underscores Facebook's commitment to serving small businesses and helping bring them and their customers into the digital economy.
"The majority of small businesses in Indonesia rely on cash to operate due to the country's large unbanked population. Digital payments are safer than cash, both for businesses and customers. And digital payments help more people participate in the economy and give businesses access to credit which is crucial for business growth," Idema said in a statement on Tuesday.
According to Meng Liu, an analyst with global market research firm Forrester, Facebook can now expand its digital payment and financial services to Indonesia and more broadly to the Southeast Asian market.
"The payment sector is still underserviced and the opportunity in Southeast Asia's emerging markets like Indonesia is worth billions of dollars. For Gojek, they will be able to embed Facebook's digital wallet offering (like WhatsApp Pay) on their platform of lifestyle services across shopping, transport etc," said Liu.
"I see the deal as the first step to building the infrastructure to expand Facebook’s payment and fintech businesses in the region," Liu added.
PayPal said the commercial partnership will enable it to "significantly grow" its scope and scale in Southeast Asia.
"This new relationship is another positive step in our journey towards becoming the worldwide payments partner of choice, and helping to fuel global commerce by connecting the world’s leading marketplaces and payment networks," PayPal said in a statement.
"However, 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," said Liu.
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.
"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," Liu added.
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