Observing the Impact of Pine Labs' Acquisition of Fave on Operations in Indonesia

News of the full acquisition of Fave by Pine Labs, a startup unicorn POS from India, worth $45 million (more than 650 million Rupiah) made us interested in exploring more about Fave's development so far in Indonesia and whether there is any future potential after the presence of the parent company.

As is known, Fave is sales platform e-vouchers discount for offline merchant. Payment Process e-vouchers completely digital, currently in Indonesia it is connected with OVO, CIMB Clicks, Indomaret, KlikBCA, BCA Klikpay, and ATM/Bank Transfer. When the transaction is successful, the consumer will automatically receive cashback or loyalty points from Fave which can be redeemed for future transactions. From a business model like this, Fave is able to attract consumers to shop at merchant partner.

It is claimed, in the three countries Fave operates (Singapore, Malaysia, and Indonesia), it has attracted more than 6 million consumers connected with 40 thousand merchant recorded a gross payment volume of $400 million.

In Indonesia, Fave is entered through sister companies Post KFit Groupon Indonesia acquisition in 2016. Then rebrand become Fave until now operates in five cities in Indonesia, namely Jakarta, Bandung, Bali, Surabaya, and Medan. Compared to the other two countries, the biggest point of Fave's presence came from Malaysia, which was present in 26 cities.

According to an official statement, the impact of the acquisition is that Fave will expand into India with brand the same serve merchant who has collaborated with Pine Labs. In total there are more than 500 thousand merchant in 3700 cities across India.

Furthermore, all Fave . investors exit and accept cash payments, while founder and Fave employees will receive cash and shares in Pine Labs. Fave investors include Sequioa Capital India, SIG Asia Investments, and local VC Venturra Capital.

Pine Labs itself is a POS player that has extensive services for SMEs such as inventory management and CRM. In order to be great app in its segment, Pine Labs provides additional services Gift card provided by Qwikcilver, which was also acquired by the company due to its extensive network of 250 brand and retailers, and 1500 corporate consumers.

Pine Labs and Fave's partnership began when Pine Labs made a strategic investment in July 2020, to expand its cashless payment solution to SMEs by integrating QR codes from Fave with Pine Labs POS machines.

Will operate UPI

In India, there will be many Fave plans. One of the highlights is being an operator for the UPI (Unified Payments Interface). The Fave system, which can attract transactions from various payment methods, could be Pine Labs' main consideration for acquiring Fave.

UPI includes innovation fintech revolutionary in India. The local central bank wants to simplify payment processing across various applications and connect with bank accounts easily, without compromising the security system. UPI eliminates the need to enter bank details or other sensitive information every time a customer initiates a transaction.

UPI allows account holders across banks to send and receive money from smartphone they simply use Aadhaar unique identification number (as E-KTP in India), mobile number or virtual payment address without entering bank account details.

Therefore, now consumers no longer need to use certain applications to send and receive money. For example, when using a taxi service, at the end of the trip the consumer only needs to provide a virtual address and the driver will ask for money from him. The consumer will get a message on your phone asking for authentication.

After the consumer authenticates the transaction by entering the password, the transaction will be completed. This process does not require drivers or consumers to share bank details. Since UPI runs on IMPS (Immediate Payments Service), the service will be available online real-time and 24x7 hours.

Since UPI was initiated in 2016, contributed transactions have continued to soar. As of March 2021, UPI has processed 2,7 billion transactions in March 2021. Pine Labs also recorded a significant 171% growth in UPI transactions over the last two quarters.

Impact for Indonesia

The inclusion of Pine Labs certainly makes Fave's steps in the future even more convincing to be more expansive. It is hoped that the innovative products from Pine Labs can bring Fave to offer something new in the industry. From monitoring DailySocial, Fave is more focused on developing in Malaysia as its main market through various feature developments and collaborations.

In the sales business e-vouchers and loyalty operating in Indonesia, there is no dominant player in this segment, aka the opportunity is still very wide. A number of other players are Traveloka Eats, TADA, Cashbac, Qraved, and Chope. Beyond that, most loyalty programs exist for online shopping provided by each platform E-commerce or applications to attract the loyalty of the users.

Without a doubt, this segment joins had time"coughs" due to the pandemic since last year. The recovery period to return to normal conditions will take time, but optimism remains high thanks to various positive initiatives from the government. Fave can take this opportunity to lead the market.