Gateway for merchants grows rapidly in Indonesia, eyes further expansion in Southeast Asia.
When Tessa Wijaya decided to make a job switch in 2016 from investment banking to an Indonesian electronic payments startup, it wasn’t because the money was better, as she took an 80% pay cut. The native of a small town in West Java says she was okay with the much-reduced salary. “I thought I needed to learn about a new business,” she said. “I took a leap.”
It was a highly successful leap for Wijaya and Xendit, the expanding payments gateway for which she became a cofounder and chief operating officer. On top of being a driving force for the company’s growth, the 40-year-old Wijaya is also a passionate advocate for more women in tech; she initiated Xendit’s Women in Tech Indonesia program, where entrepreneurs and tech professionals share experiences in workshops and digital forums.
Unlisted Xendit doesn’t disclose its profits, but it has clearly gained the confidence of many venture capital firms. In September 2021, Xendit became a unicorn after it raised $150 million in series C funding, bumping up its valuation to $1 billion. Eight months later, it bagged another $300 million in a series D round led by Coatue and Insight Partners. The latest funding raised the total amount to $538 million—the largest in the payment gateway industry by a company based in Southeast Asia.
Xendit helps businesses get what’s due to them from payment channels such as credit cards, online wallets, QR codes and other tools for electronic purchases. Xendit’s website says that in fewer than five minutes, it can set up an account for a business to start receiving digital payments. In Indonesia, the company competes with Doku and Goto’s Midtrans.
From fewer than 10 employees at the start, the company now has more than 900. Xendit, which initially focused on Indonesia, has expanded to the Philippines and is eyeing other parts of Southeast Asia. Unlike some tech firms that are paring numbers amid rough market times, Xendit says it isn’t cutting staff.
Xendit was started by Moses Lo while he was doing an M.B.A. at the University of California-Berkeley. The original dream of Lo, an Australian citizen and member of the Forbes 30 Under 30 Asia Class of 2016, was for it to become Southeast Asia’s version of digital payment app Venmo. Lo, whose mother is Indonesian and father Malaysian, pivoted to Indonesia—which was starting to have a vibrant startup scene—and to running a payment gateway.
Lo knew startups but not much about Indonesia. Just as he was setting up his business there, a mutual friend introduced him to Wijaya, who was interested in fintech as a business possibility. After getting one degree at Syracuse University and a second at the University of Sydney, she had worked for six years at investment firms including Mizuho Asia Partners and Principia Management Group, founded by former Indonesia trade minister Thomas Lembong.
They met at a Starbucks in Jakarta and clicked. A week after their coffee, Wijaya agreed to come on board. “Tessa was invaluable from the very beginning,” Lo says in an emailed message. “She deeply understood the local ecosystem, was passionate about solving problems in Southeast Asia, and was eager to amplify world-class technology and talent in the region.”
“Southeast Asia is an exciting place to be now.”
For Wijaya, switching to a startup was an adjustment. Xendit’s office then was a small house with a room rented to another startup to cut costs, she recalls. “I know that it’s not easy to build a business in Indonesia. But I saw Lo and the team were very committed. They even moved in and slept at the office.”
The timing was right. Besides her experience with financial models and presentations, Wijaya helped Xendit broaden its partnerships with her network. Along the way, she took on more operational and finance-related responsibilities. In 2018, Lo promoted Wijaya as the company’s COO.
Digital payments have increased sharply in Southeast Asia, thanks in large part to Covid-19, but so far cash is still king, according to the e-Conomy SEA 2021 report by Google, Temasek and Bain & Company. However, it may have difficulty keeping hold of the throne. The report forecast that cash transactions will lose dominance, going down to 47% of gross transaction value share in the region in 2025 from 60% in 2019—opening the door wider for payment gateway companies like Xendit.
Reet Chaudhuri, a partner at McKinsey who focuses on the payment space in Asia-Pacific, says online spending in the region will continue to grow even if there’s an economic recession. However, he notes competition is already tight and the margin in the industry is thin for core products. Thus, some players are moving to value-added products. Payment gateway companies have “now realized that they’re sitting on a wealth of data because they know which merchant is getting paid, how much and by whom,” Chaudhuri says.
Xendit has adapted to the changing environment. Travel tech companies like Traveloka of Indonesia, which used to be Xendit’s largest revenue contributor, were severely hit by the pandemic. Xendit sought other types of clients such as e-commerce and small and medium-sized enterprises (SMEs) that saw going digital as a way to survive. Wijaya says thousands of small businesses have applied for Xendit’s services over the past two years.
She also says that developing more products for SMEs is one of three fundraising objectives besides adding more value-added products and bringing all products to the regional market. Since last year, the company began offering working capital loans for SMEs. In April, Xendit bought minority shares in Bank Sahabat Sampoerna, an SME-focused lender whose main owners are Indonesian billionaires Putera Sampoerna and Djoko Susanto. With the lender, Xendit hopes to develop banking-as-a-service in the country, where nonbanks like e-commerce and marketplace companies offer banking services such as saving accounts and debit cards by connecting with a digital bank.
With more mobile connections than people in Indonesia, but with 66% of the population unbanked, Wijaya sees a huge opportunity. Banking as a service “is the next big thing,” she says, adding that Xendit is seeing whether it’s possible and how it might be able to work with banks.
As for regional expansion, Xendit entered the Philippines in December 2020 and eight months later invested in local payment gateway company Dragonpay, which had built a strong relationship with local clients over a decade. Xendit is targeting to expand into Malaysia, Singapore and Vietnam in the next two years.
“Southeast Asia is an exciting place to be now,” Wijaya says. She notes the Indonesian and Philippine markets are not the same “and it’s actually a mistake for a lot of global entrants to see the region as the same,” adding that Southeast Asia countries have different cultures, pain points and phases of technology adoption. “So if we haven’t found a strong local team to develop the products in a localized manner, I don’t think we will go in. For example, it took us a year in the Philippines to find Yang Yang Zhang [Xendit’s managing director for the country]. If not for him, we may not be this successful,” she says.
Wijaya’s efforts to get more women into tech careers can be seen at Xendit. About 40% of Xendit’s staff in Indonesia are women, and Wijaya initiated policies to keep women staying for managerial positions, such as having return-to-work plans for new mothers as well as flexible and remote working options. Personally, Wijaya has been an angel investor in several startups. “It’s not about the money because I invest a very small amount, but it’s the advice and experience I can share to enable them to grow,” she says.
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