Indonesian state-backed e-money fintech LinkAja has been pioneering digital payments in the predominantly cash-based country since its founding. Last week, Singapore-based ride-hailing giant Grab gave the company a big boost, placing bets on its potential progress.
In a Series B round LinkAja raised $100 million with the investment led by Grab. The funding round included support from Telkomsel, BRI Ventura Investama, and Mandiri Capital Indonesia. LinkAja is an interbank network in Indonesia. It connects four state owned banks (Bank Mandiri, Bank Tabungan Negara, BNI46, and Bank Rakyat Indonesia) to provide cash withdrawal, payments, and inquiry services within the network.
Launched in June of last year, LinkAja targets the middle class/aspirant, and micro, small, and medium enterprise (MSME) segments in Indonesia. Today the company boasts over 58 million registered users poising Indonesia’s developing market to have enormous potential in the fintech space.
In a recent report from the GSMA, it was found that Asia currently hosts 473 million registered mobile money accounts, making up almost half of all mobile money accounts globally. According to a study by the Mandiri Institute, Indonesia’s small businesses account for more than 60% of gross domestic product (GDP) and employ a majority of the labor force. It further suggested that digitalized SMEs can even help Indonesia reduce 1.5% of the economic burden on GDP amid the COVID-19 pandemic, opening a big door of opportunity for the fintech.
Following this investment round, Grab will become a minority shareholder in the fintech. Speaking for the investment, Grab Indonesia’s managing director Neneng Goenadi shared in a statement that the e-wallet’s hyperlocal knowledge base and nationwide distribution network spanning Indonesia’s tier two and three cities was a key motivating factor. He added, “This investment and strategic collaboration with LinkAja have proven our commitment to accelerating financial inclusion in Indonesia.” Through this investment, Grab will be able to focus on extending its financial ecosystem and services throughout Indonesia.
