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Grab Reportedly in Talks to Acquire Indonesia's Kudo

Move would bolster ride-hailing app’s payment offerings

February 14, 2017 | Retail & Ecommerce

Singapore-based ride-hailing service Grab reportedly is in talks to acquire Kudo, a digital payments service based in Indonesia, for $100 million. News of the possible acquisition was first reported by Reuters on Monday.

Grab is one of several competitors seeking to establish itself in the ride-hailing sector in Southeast Asia. It currently offers service in six countries—Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam—and claims 33 million downloads of its app. In most, if not all, of those countries, Grab counts Uber and homegrown service Go-Jek as its top competitors. Indonesia, with a population of more than 250 million, is a particularly enticing market for Grab.

Grab is attempting to bridge customers from taxi services to a range of other features, including food delivery, courier services and bill payment. To more easily facilitate these transactions, services like Grab and Go-Jek have rolled out their own payment services—in Grab’s case, GrabPay. The digital payment service allows customers to deposit funds to what is essentially a mobile wallet in a variety of ways, including using credit or debit cards, ATMs, online banks and even by handing cash over at convenience stores. With consumers able to make payments directly from Grab’s app, they will ostensibly have even more reason to use the service.

Grab’s potential purchase of Kudo is a natural way for the ride-hailing firm to bolster its payment offerings. Kudo was founded in 2014 with a focus on facilitating online purchases by unbanked and underbanked consumers in smaller cities and towns in Indonesia by using agents as intermediaries.

The possible acquisition mirrors other moves made by some of the world’s larger digital payment players. Last month, China-based Ant Financial, the parent company of popular digital payment service Alipay, announced it was acquiring the US’s Moneygram, another business that focuses on the underbanked consumer segment.

Grab’s move toward Kudo may be the first of several. The company, valued at $3 billion, last week announced it would sink $700 million into various investments in Indonesia over the next four years, including $100 million that would be dedicated to startups alone.

Companies like Ant Financial, and now Grab, are seeking to establish themselves with mobile-first consumers who are just getting online and have never used traditional retail banking services before. For many consumers in Southeast Asia, popular ride-hailing apps like Grab might serve as a natural stepping stone into digital payment and banking ecosystems.

—Rahul Chadha

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