Indonesia's Nusantara: Asia's next fintech hub?

In The Top Up this week, we look at Indonesia’s plans to build a fintech mecca via its new capital and WhatsApp’s new payments feature in Singapore. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every fortnight via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here](. Written by Melissa Goh Journalist Hello {NAME} Nusantara, Indonesia’s new capital city that was first unveiled in 2019, could host 4.8 million jobs across tech, petrochemicals, and renewable energy in 22 years - if all goes as planned, that is. However, the Indonesian government faces an uphill battle in securing backers to finance the US$32 billion project before 2024, the deadline to complete its first phase of construction. That’s not counting the commitment it needs from companies to relocate and for talent to follow. Should it succeed, though, the new capital could reshape Indonesia’s financial landscape, as my colleague Budi discusses in this week’s Big Story. Instead of trying to emulate Asian fintech hubs like Hong Kong or Singapore, Nusantara wants to build its niche on its own terms, one that prioritizes local capital markets, financial inclusion, and domestic innovation. In other news, WhatsApp has teamed up with Stripe to launch in-chat payments in Singapore. The new feature allows merchants to accept payments directly via the messaging platform. Announced last week, the move makes Singapore the third market after India and Brazil where merchants have this ability. I look at how that will change the way people interact with businesses in this week’s Hot Take. -- Melissa  --------------------------------------------------------------- THE BIG STORY [Can Indonesia’s new capital Nusantara rival the fintech hubs of SG and HK?]( The government has prepared various fiscal and non-fiscal plans to bolster the investment climate in the new city.  --------------------------------------------------------------- THE HOT TAKE WhatsApp’s launches in-chat payments, the missing piece SG has been waiting for Here’s what happened: - Fintech firm Stripe last week [announced]( its partnership with Meta-owned messaging platform WhatsApp that will allow businesses in Singapore to accept payments directly through chats on the messaging platform. - Built via Stripe Connect and Stripe Checkout, the new feature enables consumers to transact via debit and credit cards as well as real-time payments method PayNow - no need to be redirected to a website or app. - The feature is currently in beta and accessible to a small number of businesses in Singapore, but it will be expanded in the coming months. Here’s our take: Last week, Singapore became the third country after India and Brazil where merchants can accept payments directly via WhatsApp. (Peer-to-peer payment, however, [isn’t available in the city-state]( unlike in the other two markets.) For a long time, even as WhatsApp [added newer and better business tools]( it was missing a key part of the puzzle that counterparts like WeChat and Line have: payments. Merchants using WhatsApp got around this hurdle by sending payment links, QR codes, or their bank account numbers to their customers to enable payments and fund transfers. Having to leave the chat app or toggling between screens, however, created friction in the process. People around the world communicate with merchants or shops directly through messaging apps on a daily basis. Sure, filling in a website form or speaking to a chatbot might do the job, but for many, nothing beats the human touch and immediacy of messaging someone. As it is, WhatsApp provides a whole [suite]( of business tools - from managing chats on multiple devices to custom URL links - for over 50 million businesses worldwide. Payments take those efforts to the next level. It’s worth noting that while conversational commerce is a growing trend, it isn’t as huge in Singapore as it is in India or Indonesia, where shoppers [appreciate the personalized service]( they get while buying on WhatsApp compared to a webstore. I speak for many in Singapore when I say that online checkouts do the job just fine. A higher trust in merchants and buying online as well as the existence of reliable returns and refund policies could be among the possible reasons. Around [76% of merchants in Indonesia use WhatsApp]( to reach customers compared to 44% in Singapore, according to a PayPal report. In addition, [79% of consumers]( in the archipelago say they are more likely to do business or purchase from a company that they could contact via messaging, according to a Kantar survey commissioned by Meta. So far, Meta has not indicated whether it plans to launch a similar service in other Southeast Asian countries. Still, WhatApp’s [tie-up]( in India with JioMart - the ecommerce firm owned by local conglomerate Reliance Industries - offers a glimpse of what end-to-end shopping on the chat app could look like. Users in India can shop for groceries at JioMart by simply initiating a conversation via the firm’s WhatsApp number. They can then browse selections, add to cart, and pay all within the app. That said, functionality alone [may not be enough]( for customers to make a switch from the e-grocery apps they’ve been using.  See also: [400m Indians use WhatsApp, but will they shop on it?]( Scams are also a perennial issue. In Singapore, for example, scams on WhatsApp are rife and can sometimes take the form of phony [shopping surveys]( that promise monetary rewards. In-chat payments certainly could give scammers a more seamless way to trick victims by impersonating accounts, though that’s less of a worry now since peer-to-peer in-chat payments aren’t available yet. Both Stripe and WhatsApp have [onboarding processes]( that verify the legitimacy of businesses registering for the payments service in Singapore. Businesses must also have a WhatsApp Business Account, a Stripe account, and their goods and services Tax (GST) number in order to sign up for the service. Whatever the case, it seems the new payments functionality will be generally good for businesses in the city-state.It is free to use for merchants and buyers, with no added fees from WhatsApp. However, the usual payment processing fees for card payments and data fees charged by mobile phone providers will apply. – Melissa  --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [SG fintech firm gets $6.6m to expand automated business loans]( Jenfi captures data from accounting software, payment gateways, online marketplaces, and other platforms to provide revenue-based financing with same-day disbursement. 2️⃣ [Indonesia’s UangTeman under scrutiny over alleged tax evasion]( According to one source, the troubled lender hasn’t paid its income tax since 2020, even though it had deducted income taxes from employee salaries. 3️⃣ [P2P lender Danamart officially pivots to crowdfunding]( The firm, which has received a license from Indonesia’s financial regulator OJK, got the green light to provide SMEs with business capital of up to US$677,700. 4️⃣[Rural bank-focused Komunal posts $118m in transaction volume for Q1]( The Indonesian startup’s MSME deposits and loan transactions grew 3.5x to reach US$118.6 million in the first quarter of 2023. 5️⃣ [SG P2P lender Capital Match to be liquidated]( In an email to investors dated May 11, the fintech firm said it would be appointing a liquidator to handle operations and communications going forward.  --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preferences center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you in a fortnight! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2023 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894