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Jakarta Post

Newbie Cashlez, Pinjam eye robust transactions growth

Financial technology (fintech) services are upbeat about their growth prospects on the back of large room for expanding financial inclusion in a country where less than half of the adult population have access to banking services

Stefani Ribka (The Jakarta Post)
Jakarta
Fri, June 17, 2016

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Newbie Cashlez, Pinjam eye robust transactions growth

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inancial technology (fintech) services are upbeat about their growth prospects on the back of large room for expanding financial inclusion in a country where less than half of the adult population have access to banking services.

Mobile point of sales (mPos) provider Cashlez and pawning website pinjam.co.id are two of the fintech firms that are optimistic about seeing their businesses grow this year after only preparing operations last year.

Cashlez targets to distribute 6,000 mobile payment devices (dongle), which act as electronic data capture devices (EDCs), this year, its first year of commercial operation.

“We’re upbeat about the business, as most or 91.2 percent of transactions are still done in cash, so there is a large growth opportunity,” Cashlez president director Teddy Setiawan Tee said.

The firm claims its dongles, much smaller and thinner than EDCs that are the size of many smartphones, would help merchants by offering simpler registration procedures but safe and flexible transactions at the same time.

The device, sold for Rp 1.7 million (US$127.8) or rented for Rp 88,000 per month, can be used for payments via credit or debit cards issued by Visa or MasterCard. The company has received level 1 certification based on the global Payment Card Industry Data Security Standard (PCIDSS).

Teddy said the firm had entered a partnership with state-controlled lender Bank Mandiri to connect it to the bank’s corporate or merchant clients and had local major courier service Tiki as one of its early clients.

“Tiki couriers will be equipped with dongles, so they can collect large payments from buyers of online shops. Before, it was hard for them to accept big cash-on-delivery,” he said.

Besides Bank Mandiri, the firm is also approaching two other banks for possible partnerships.

Cashlez’ business is in line with Bank Indonesia’s (BI) “cashless society” campaign, which aims to drive Indonesians to conduct more non-cash transactions.

Meanwhile, online pawning company Pinjam (which literally means “borrow”) targets to disburse Rp 100 billion in loans this year after receiving a warm welcome from the public last year.

Pinjam cofounder Teguh B. Ariwibowo said last year that the firm had channeled Rp 1.3 billion to 250 debtors out of 600 applications without marketing activities. Only collateral of three debtors had to be sold over failed repayment.

This year, the start-up, with active marketing, has reaped 7,000 loan applications from Jakarta only and targets to reap more from other cities in Java by the end of the year.

Pinjam offers loans of up to Rp 100 million for as little as 0.7 percent interest per week with a maximum tenure of 12 weeks.

To secure a loan, debtors deposit their valuables, ranging from gold, gadgets to vehicle certificates. Applicants can upload pictures of their valuables online for Pinjam to estimate the value. The collateral will then be picked up for physical checks for the final estimation.

Teguh is upbeat about the goal, as the company is directly approaching small and medium enterprises in Java and opening two physical pawn centers in Panglima Polim and Daan Mogot, both in Jakarta.

In the future, Pinjam wishes to partner with various retailers, including gold and electronic stores, to use their physical outlets for applicants to come and have their belongings valued.

“Many small and medium businesses need loans with easier requirements than what banks offer, so we have ample space to grow in Indonesia,” Teguh said, adding that the company was targeting especially those who are not banked yet. Only 36 percent of Indonesian adults had bank accounts in 2014.

Both Cashlez and Pinjam see how they can change people’s habits from offline to online interactions as the biggest challenge.

Indonesia’s fintech industry is growing rapidly, with an estimated value of $14.5 billion at present that is expected to grow by 18 percent annually until it reaches $28.8 billion in 2020, according to Statista’s Digital Market Outlook.

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