Merchant Gateway is growing rapidly in Indonesia, considering further expansion in Southeast Asia.
Ohen Tessa Wijaya decided to change jobs in 2016 from investment banking to an Indonesian e-payments startup, it wasn’t because the money was better, because she took a pay cut of 80%. The native of a small town in West Java says she was okay with the greatly reduced salary. “I thought I needed to know about a new business,” she said. “I took the leap.”
It was a very successful leap for Wijaya and Xendit, the growing payment gateway for which she became co-founder and COO. As well as being a driving force behind the company’s growth, 40-year-old Wijaya is also a strong advocate for more women in tech. she launched Xendit’s Women in Tech Indonesia program, where entrepreneurs and tech professionals share their experiences in digital workshops and forums.
Xendit, unlisted, does not disclose its earnings, but it has clearly earned the trust of many venture capitalists. In September 2021, Xendit became a unicorn after raising $150 million in Series C funding, bringing its valuation to $1 billion. Eight months later, it pocketed another $300 million in a Series D round led by Coatue and Insight Partners. The latest funding brought the total amount to $538 million, the largest in the payment gateway industry by a Southeast Asia-based company.
Xendit helps businesses get their due from payment channels such as credit cards, online wallets, QR codes, and other tools for e-commerce. Xendit’s website says that in less than five minutes, it can create an account for a business to start receiving digital payments. In Indonesia, the company competes with Midtrans of Doku and Goto.
Starting with less than 10 employees, 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 companies that cut staff in tough market times, Xendit says it’s not about cutting staff.
Xendit was started by Moses Lo while doing an MBA at the University of California at Berkeley. The initial dream of Lo, an Australian citizen and member of the Forbes 30 Under 30 Asia Class of 2016, was to become Southeast Asia’s version of digital payment app Venmo. Lo, whose mother is Indonesian and father Malaysian, looked to Indonesia — which was starting to have a vibrant startup scene — and run a payment gateway.
Lo knew about startups but not much about Indonesia. While he was setting up his business there, a mutual friend introduced him to Wijaya, who was interested in fintech as a business opportunity. After graduating from Syracuse University and a second from the University of Sydney, she worked for six years in investment companies such as Mizuho Asia Partners and Principia Management Group, founded by the former Indonesian minister trade Thomas Lembong.
They met at a Starbucks in Jakarta and clicked. A week after their coffee, Wijaya agreed to come on board. “Tessa has been invaluable from the start,” Lo says in an emailed message. “She deeply understood the local ecosystem, was passionate about solving problems in Southeast Asia, and eager to amplify world-class technology and talent in the region.”
“Southeast Asia is an exciting place to live now.”
For Wijaya, moving to a startup was an adjustment. Xendit’s office then was a small house with a bedroom rented from another startup to cut costs, she recalls. “I know it’s not easy to start a business in Indonesia. But I saw that Lo and the team were very committed. They even moved in and slept in the office.
The time had come. In addition to his experience with financial models and presentations, Wijaya has helped Xendit expand its partnerships with its network. Along the way, she took on more operational and financial responsibilities. In 2018, Lo promoted Wijaya to COO of the company.
Digital payments have surged in Southeast Asia, largely due to Covid-19, but so far cash is still king, according to e-Conomy SEA 2021 report from Google, Temasek and Bain & Company. However, he may struggle to keep the throne. The report predicts that cash transactions will lose their dominance, dropping from 60% in 2019 to 47% of the region’s gross transaction value share in 2025, opening the door for payment gateway companies like Xendit.
Reet Chaudhuri, a partner at McKinsey that focuses on the Asia-Pacific payments space, says online spending in the region will continue to grow even in the face of an economic downturn. However, he notes that the competition is already tight and the margin in the industry is slim for commodities. Thus, some players are turning to value-added products. Payment gateway companies have “now realized that they are sitting on a wealth of data because they know which merchant is being paid, how much, and by whom,” says Chaudhuri.
Xendit has adapted to the changing environment. Travel tech companies like Indonesia’s Traveloka, which was once Xendit’s biggest revenue contributor, have been hit hard by the pandemic. Xendit sought out other types of customers such as e-commerce and small and medium-sized enterprises (SMEs) who saw digital as a way to survive. Wijaya says thousands of small businesses have requested Xendit’s services over the past two years.
She also says that developing more products for SMEs is one of the three fundraising goals besides adding more value-added products and bringing all products to the regional market. Since last year, the company has started offering working capital loans to 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. Together with the lender, Xendit hopes to expand banking as a service in the country, where non-banks like e-commerce and marketplace companies offer banking services such as savings accounts and debit cards by logging on. to 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 if it’s possible and how it could work with banks.
Regarding regional expansion, Xendit entered the Philippines in December 2020 and eight months later invested in local payment gateway company Dragonpay, which had established a strong relationship with local customers for a decade. Xendit aims to expand into Malaysia, Singapore and Vietnam over the next two years.
“Southeast Asia is an exciting place to live now,” says Wijaya. She notes that 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 Asian 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 way, I don’t think we’ll get in. For example, it took us a year in the Philippines to find Yang Yang Zhang. [Xendit’s managing director for the country]. Without him, we may not be as successful,” she says.
Wijaya’s efforts to attract more women into tech careers can be seen at Xendit. About 40% of Xendit’s staff in Indonesia are women, and Wijaya has launched policies to keep women in leadership positions, such as return-to-work plans for new mothers as well as flexible and remote work options. . Personally, Wijaya has been an angel investor in several startups. “It’s not about the money because I’m investing a very small amount, but it’s about the advice and experience I can share to enable them to grow,” she says.