Uber Rival Grab Adds Digital Payments Unit with Kudo Acquisition - eMarketer
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Uber Rival Grab Adds Digital Payments Unit with Kudo Acquisition

Ride-hailing platform expands services to Indonesia’s nonbanked smartphone users

April 4, 2017 | Retail & Ecommerce

Singapore-based ride-hailing service Grab cemented its courtship of Indonesian digital payments service Kudo this week, announcing it had agreed to acquire the company for an undisclosed sum. (Various media reports, citing anonymous sources, reported that the acquisition figure was around $100 million.)

Kudo targets unbanked and underbanked customers in Indonesia by letting them process digital payments through a network of more than 400,000 agents, or intermediaries, found in 500 cities and towns across the country.

Customers who want to make a digital payment hand their cash over to one of these agents, which can be a physical store, office or even a person. Kudo users can then make purchases from ecommerce platforms, pay utility bills or top off their mobile phone minutes through a digital transaction. The agents get a cut of the transaction.

Grab said that Kudo would be folded into its existing payment service, GrabPay, which lets customers add funds using credit or debit cards, ATMs, online banks and even by paying cash at convenience stores.

“Grab shares our vision of creating payments solutions that empower the unbanked to benefit from the rapid growth of ecommerce,” Kudo CEO Albert Lucius said in a statement.

Grab is making clear moves to expand its services beyond facilitating taxi rides in Southeast Asia, and its acquisition of Kudo is a strong step in that direction. Grab currently operates in six markets across the region, but Indonesia appears central to its expansion strategy—no doubt in large part because of the swelling ranks of smartphone users there.

eMarketer estimates 67.1 million people, or 25.8% of Indonesia’s population, will be smartphone users this year. That figure is expected to grow to 92.1 million by 2020, when more than a third of people in the country will regularly use the devices.

Grab has already seen its ride-hailing business in Indonesia increase by 600% in 2016, according to The Straits Times. The company has promised to spend $700 million on a startup fund, research and development and other initiatives in the country over the next four years as part of a strategy to take on rivals Uber and Indonesia-based Go-Jek.

But instead of focusing on its taxi service rivals, Grab appears to be taking a page out of WeChat’s strategy book. Just as WeChat began as a messaging app and slowly expanded its offerings to include digital payments, ecommerce and now financial services, Grab is looking to grow beyond its ride-hailing roots with a similar portfolio of digital services.

—Rahul Chadha

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