Following the news that Facebook and Paypal have invested in GoJek, Indonesia’s ride-hailing and food delivery giant, Analyst Meng Liu has the following comments:
With this investment, Facebook can 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. Consumers who are underserved by traditional banks and card networks will have the chance to such 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 rollout of this inclusive cross-border payment offering to immigrant workers in the Southeast Asian markets as well. I see the deal as the first step to building the infrastructure to expand Facebook’s payment and fintech businesses in the region.
In addition, many people may think Alipay and WeChat Pay would be negatively affected by this deal. 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. 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. The expansion of Facebook’s digital financial services to Southeast Asia won’t happen rapidly but will be a gradual process. 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.
Meng is also available to comment on FinTech developments in Asia.