Cashless payments company OVO has become Indonesia’s fifth unicorn, easily surpassing the US$1bn valuation mark that defines such a tech rarity and joining a club that includes one of OVO's financial backers, e-commerce marketplace Tokopedia. According to a report by Finance Asia, citing a person with knowledge of OVO's finances, the company was last valued at US$2.9bn after its latest funding round.
Launched in 2016, OVO’s e-wallet allows users to pay at many merchants, including supermarkets, F&B outlets, and even online marketplaces. OVO is also the payment partner for Grab in Indonesia, helping the Malaysian ride-hailing startup compete against local powerhouse Gojek and its own e-wallet, GoPay.
This was not the first time that OVO was reported to be Indonesia’s fifth unicorn. In a January interview with CNBC Indonesia, Johnny Widodo, a director of OVO at the time, said that OVO had already achieved unicorn status, but that claim could not be confirmed.
OVO's tangled parentage
Out of Indonesia's five unicorns, four – Tokopedia, ride-hailing startup Gojek, online travel platform Traveloka, and e-commerce marketplace Bukalapak – were established by entrepreneurs with seemingly little connection to established businesses or conglomerates, at least in the beginning.
OVO, though, was established as a subsidiary of Lippo Group. The Lippo Group company that manages OVO, PT Visionet Internasional, is itself listed as a "related party" in the 2018 annual report of Lippo Group's publicly listed holding company, PT Multipolar. Articles from 2016 and 2017 reported OVO as being a product of Lippo X, a Lippo subsidiary that handles digital payments. It is unclear whether Lippo X still exists, or whether the brand name was discontinued to make way for OVO.
Since obtaining its e-money license in 2017, OVO quickly gained traction as it became an alternative payment method at many Lippo-affiliated businesses, including F&B merchants, supermarkets, shopping malls and even hospitals. In some cases, this network effect has caused OVO to fall afoul of regulators. After being accused of monopolizing the parking fee payment systems at Lippo-owned malls and hospitals, OVO is now being investigated by Indonesia's Business Competition Supervisory Commission.
OVO is also a payment partner of ride-hailing company Grab, after it struggled to secure the necessary license to launch GrabPay in Indonesia. Following the partnership, Grab-branded drop-off and pick-up points appeared at Lippo-owned properties. OVO also became a digital payment partner of Tokopedia after the e-commerce unicorn shelved its own digital payment wallet. OVO has also received funding from Tokyo Century Group.
Pitched battle ahead
OVO’s partnerships and network advantages has helped it immensely in the battle against Gojek’s own payment service, GoPay. Most estimates put GoPay’s user numbers slightly above OVO’s. Many Indonesians use both services, taking advantage of their various discounts, cashbacks and other exclusive promotional offers.
GoPay might soon see its rival grow in strength, as Grab is reportedly pushing for a merger between OVO and DANA, an e-wallet service produced by local conglomerate Elang Mahkota Teknologi (Emtek) and Alibaba-owned Ant Financial. A research report published by iPrice stated that DANA’s monthly active user count is just behind OVO, despite only being established in the fourth quarter of 2018.
