1. Startups

Pandemic Doesn't Stop Remittance Business in Indonesia

Expansion of reach, funding, and the presence of new players color the remittance business during the pandemic

The Covid-19 outbreak is the main reason many economic sectors are sluggish around the world. Moments like this always give rise to a sector or industry player that actually shines. The remittance business is one of them. The pandemic did not block the potential light of the remittance market, especially in Indonesia.

During this pandemic period, we noted that there were a number of positive signals from the market indicating that the remittance business's performance remained bright. The emergence of new players, funding news, and market expansion are encouraging notes from this business.

Gaining moments during a pandemic

We spoke with two local remittance players to see the positive record of this vertical, Transfez and Topremit. Transfez, which earlier this year has reached 37 countries, now its traces are already in 47 countries on 5 different continents. This shows that their commitment to reach a total of 80 countries this year has not wavered.

Even in the speed aspect, Transfez has succeeded in improving the quality of its services. In some popular destination countries, such as Singapore, it only takes a few seconds to receive money transfers from users in Indonesia. Other countries that have similar speeds are England, Australia, Hong Kong, the Philippines, Vietnam, India, Nigeria, Mexico and Ghana.

"The addition of reach countries and increasing delivery speed has contributed to the increase in the number of Transfez users. Since the COVID-19 pandemic in March 2020, the number of Transfez users has increased by more than 400%," explained Transfez Head of Marketing & Communication Diandra Bernadin.

Good performance was also experienced Topremit. This startup from Medan expanded its market reach during the pandemic to 55 destination countries. South Korea, Türkiye and European countries are additional new destinations for their users.

Speed ​​is an important factor in the quality of remittance services. Topremit agrees with this aspect. This can be seen from the duration of sending money from users in Indonesia to South Korea, Singapore and the United Kingdom, which only takes a matter of minutes.

"Yesterday at the end of 2019, we managed to process more than 280 billion Rupiah with 16.000 user who registered and in the last 6 months. Transactions [currently] have reached more than IDR 612 billion with 35.000 user," said Topremit CEO & Co-Founder Hermanto Wie.

Factors driving growth

The bright development of the remittance business is not only happening at Transfez and Topremit. Some positive news came from other players. For example funding which Wallex Technologies managed to acquire earlier this month. Wallex, which has had a fund transfer permit from Bank Indonesia since 2018, has successfully attracted Series A funding from BAce Capital, SMDV and Skystar Capital.

Funding injections were also obtained nium, a remittance player from Singapore operating in Indonesia. BRI Ventures and VISA are the two names participating in providing funding to Nium. As of the first quarter of 2020, Nium was reported to have pocketed a transaction value of $2 billion.

A new player who is exploring the fortunes of the remittance business is OY! Indonesia. OY! Indonesia, which in fact is a platform aggregator wallets, launched its remittance service in early March. Currently their new service has reached Singapore, Malaysia, India, South Korea and China.

Transfez explained that the pandemic situation which requires everything to be practical and activities from home only strengthens the position of digital remittance players like them. So far, the Indonesian remittance market has been dominated by banks and conventional players who require physical presence at the nearest branch office or agent to send money.

"For us, crisis holds opportunity. And this is the right time and opportunity for us to introduce Transfez widely," explained Edo Windratno, CEO & Co-Founder of Transfez.

Meanwhile, Hermanto explained that the outbreak conditions require remittance players to provide their services more quickly and more widely. The regional quarantine situation in many countries has made many remittance service users turn to online platforms like them.

"During this pandemic, many people want to send money to their beloved family abroad because of the current worrying situation. User "and our transactions have actually increased because it is not convenient for them to leave the house and carry out offline transactions like before," added Hermanto.

Economist from the Center of Reform on Economics (CORE) Yusuf Rendy Manilet assesses that the popularity of remittances this year cannot be separated from its enormous potential. The huge potential that has been relatively unexplored by digital players places remittances as the next most promising derivative of fintech services.

One of the factors driving the large potential for remittances is the number of Indonesian workers and students abroad. Moreover, according to Yusuf, Indonesia will experience a demographic bonus. Growth in the productive age group will still increase -- something he said reassures investors about the prospects of the remittance business.

"In my opinion, this fact is an encouragement for financiers to inject funds into remittance players," explained Yusuf.

The Central Statistics Agency (BPS) reports that the number of migrant workers abroad is 276.553 people. Taiwan, Malaysia and Hong Kong are three favorite destinations for our workers. Meanwhile, the number of Indonesian students studying in other countries 20.225 people. Both students and workers are the foundation of the remittance business, but their market has the potential to continue to widen.

However, local remittance players still have a big job to do, namely facilitating money transfers from abroad to within the country. Something that local players have not been able to do until now. As noted by the World Bank (2018), remittances entering Indonesia reached $11 billion or around IDR 150 trillion, while outgoing remittances were around US$5 billion or IDR 68,5 trillion.

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