On a humid March day at the tail end of Indonesia’s rainy season, Danial Futaki was in a frenzy. He had planned to enroll in a master’s degree program at the Universitas Airlangga in Surabaya, a city on the eastern tip of the island of Java, but, to secure his place, he had to get a set of documents to the registrar’s office there, more than 750 kilometers away from his rented room in Jakarta.

Luckily, the solution was already in his pocket: Futaki sent the documents using GoSend, the on-demand courier service from tech giant Gojek. He paid using the platform’s payment service, GoPay, the most widely used e-wallet in Indonesia. When he went out to meet the driver, he grabbed a KF94 mask as protection. The trifold mask doesn’t fog up his glasses, and he buys them in bulk from e-commerce platform Tokopedia. 

Across Indonesia, life’s daily tasks, from getting groceries to paying bills, can increasingly be accomplished without ever leaving the platforms of the country’s two largest tech companies: ride-hailing and delivery company Gojek and e-commerce site Tokopedia. In May, the two companies formally announced that they would merge to become GoTo Group, an $18 billion giant that brings together an array of functionalities that Indonesians have come to depend on: ride hailing, food and grocery delivery, mobile gaming, financial services, and online retail, all underpinned by payment platform GoPay.

The payment piece of the combined company could be what makes GoTo more than the sum of its parts. It could allow the company to do what most fintechs only dream of and capture every frequency of consumer transaction, from the daily (groceries, travel, media) to the regular discretionary spend (food delivery) to larger purchases (e-commerce) and even investments and banking products. It’s a journey that only a handful of companies in China have managed to make — notably Gojek backer Tencent and Tokopedia investor Alibaba. GoTo’s aim now is to replicate that model and leverage its virally popular services into an all-encompassing super app.

“The GoTo merger has created the most complete digital ecosystem in Indonesia,” said Joel Shen, a partner at global law firm Withers, who has previously worked with Tokopedia, Gojek, and its competitor Grab.

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In Central Java’s historic royal capital city, Solo, journalist Mariyana Ricky bought everything she uses in her day-to-day work documenting the Covid-19 pandemic for a local newspaper on Tokopedia. The 32-year-old got her camera, MacBook, iPhone, and AirPods from the e-commerce site, which she also uses to buy data and credit for her smartphone. 

Ricky is a typical customer of Tokopedia, which has grown since its founding in 2009 from a simple online marketplace to a burgeoning fintech with its own credit and peer-to-peer lending services, 11 million merchants, and nearly $3 billion in funding. While GoPay is often used for small purchases — an iced drink from a street vendor or a quick ride to work — Tokopedia has become a destination for discretionary spending on things like electronics and home goods. Ricky says she tends to use Tokopedia for purchases over $7 (about 100,000 rupiah). She told Rest of World that she shops on Tokopedia more often than she shops offline. “It’s more convenient,” said Ricky. “And I can’t stay focused when I go shopping offline. At first, I’ll want to find certain items, but I’ll end up buying other items and being over budget.”
Gojek too has grown in the past decade from its founding in 2010 as a ride-hailing app to offering a dizzying constellation of services that include grocery and food delivery, on-demand courier services, and GoPay’s digital payments and personal financial management services.

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GoPay is the primary payment method for a ride or delivery from Gojek’s more than 2 million drivers and 900,000 merchants, but the company has bigger ambitions for the service. GoPay markets itself as more than a payment system: it pitches itself as a financial services platform for people who are not well served by the formal financial system. Gojek drivers and passengers can use it to manage their insurance and loans. Consumers can use it to pay for insurance for everything, from personal electronic devices to life, through the company’s GoSure insurance platform. And participating insurance companies have been able to use sales data collected by the app in their own loan applications. It has expanded into incremental deferred payment through PayLater, which operates much as a credit card would, and into bill management through GoBills. Its GoStore product allows small businesses to create online shops and integrates with Facebook and Instagram.

Late last year, Gojek shelled out $159 million for a 22% stake in Bank Jago, a local lender, allowing GoPay users to open traditional bank accounts with the bank through the app. 

GoPay is already accepted by millions of independent retailers as well as platforms like YouTube. During the pandemic, when travel between provinces has at times been restricted, Ricky, the journalist, has gotten a rapid Covid-19 antigen test every few months from health tech app Halodoc, with a discount for paying with GoPay. The merger between Gojek and Tokopedia should make it easier for people to use GoPay on Tokopedia and will likely cement the app’s dominance in Indonesia’s digital wallets.

GoPay is currently used mostly for smaller transactions — the kind of daily necessities and discretionary spending available through GoJek’s apps. Tokopedia will bring higher average transaction values, assuming customers are willing to use GoPay for their purchases over the platform. It will also bring a huge customer base and entrenched presence in markets that GoPay is yet to crack, such as the millions of small and midsized enterprises that sell through Tokopedia’s marketplace. Analysts told Rest of World that GoTo’s goal isn’t to attract new customers but to deepen its relationship with its existing ones, using the data it captures about their daily activities to create new, targeted services for them.

“Their aspiration now is to offer holistic services to their customer base, so their customers are always using one of their applications,” said Dewi Rengganis, payments industry analyst at Frost & Sullivan in Kuala Lumpur.

This kind of cross-sector dominance has only really been achieved by companies in China. Tencent, which invested in Gojek in 2017, was able to build an ecosystem starting with its messaging app, WeChat, and WeChat Pay, its associated fintech product. On top of online shopping and everyday electronic payments, WeChat Pay users can also use the platform to pay bills, book transportation, and access microcredit. Tencent’s main rival, Alibaba, which made its initial investment in Tokopedia in 2017, began as an e-commerce platform and grew into a digital financial services powerhouse that can be used for everything from paying bills to checking social security benefits to managing your credit.

In 2020, financial services contributed nearly a quarter of Tencent’s more than $20 billion revenue, according to analysis from fintech consultancy Kapronasia. Alibaba’s financial subsidiary Ant Group posted more than $3 billion in profit during the first half of 2020.

With margins in ride hailing, food delivery, and basic payments thin, companies like Grab and Gojek want to emulate their Chinese predecessors and move up the chain into more profitable business lines, such as consumer lending. “Many of these companies see the way that Alipay and WeChatPay have leveraged payments to move into these other financial products and services,” Kapronasia’s director, Zennon Kapron, told Rest of World. “They see it as a way to get into these higher margin fintech products and services.”

But getting there is proving costly. Shopee, Grab, and Gojek have all had to burn investors’ money to bring customers onto their platforms, to try to build a critical mass of users that they can then leverage into fintech products. It’s not entirely clear that it will work, Kapron said. WeChat Pay’s stickiness comes from the fact that its underlying messaging service is ubiquitous: people are on the app the whole time. “Ride hailing or food delivery … are probably everyday use cases, but they’re not all-of-the-time use cases,” Kapron said. “With WeChat, you have it open all the time, because you’re chatting with friends. That’s very difficult to replicate.”

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GoTo has lined up a fresh round of fundraising, which could make it Southeast Asia’s most valuable tech company, ahead of a likely dual listing in New York and Jakarta. The merger will give the company a powerful position in Indonesia, Southeast Asia’s largest and most populous economy, although there are still some speed bumps ahead. 

Just days after the merger was announced, Indonesia’s antitrust regulator, KPPU, said it would scrutinize the deal for potential anti-competitive behavior. A series of data leaks in Indonesia, including the breach of 91 million Tokopedia accounts last year, sparked a new interest in cybersecurity and data protection. A bill on data protection for digital users currently before the Indonesian Parliament could limit how companies collect and store data, and would be a “game changer” for GoTo, according to Bhima Yudhistira Adhinegara, a researcher at the Institute for Development of Economics and Finance in Jakarta. 

“Indonesia wasn’t so concerned at the beginning of the digital economic boom; we were just concerned about how cheaply an application could be available to consumers, Adhinegara said. “But this regulation will look at how the company has a responsibility to ensure that data is used with concern for the customer.”

There will also be competitive pressures, as Gojek’s and Tokopedia’s rivals double down on their own efforts to become super apps.

Regional e-commerce rival Shopee has spent big on breaking Southeast Asian markets with cut-rate promotions and has fintech ambitions through ShopeePay.

Another crucial challenge to GoPay’s supremacy remains: along with Gojek’s biggest competitor, Grab, Tokopedia is an investor in a rival payment platform, OVO. As Grab and Gojek have competed to expand their services across Southeast Asia, Grab partnered with a telecommunications company in a bid for a digital banking license. Indonesia’s regulations mean that, without special dispensation, GoTo will likely have to divest its stake in OVO. Grab, flush with cash after pulling off a record-breaking SPAC merger worth nearly $40 billion, in April, may deepen its links with OVO, as it, too, tries to create a super-app ecosystem based on its strong positions in food delivery and ride hailing. Grab also has a stake in another e-wallet, Dana, which is backed by China’s Ant Financial.

“Ovo is the most complicated moving part in the GoTo merger,” said Shen at Withers in Singapore. “One possible option is GoTo sells its stake in OVO to Grab. This is … the one that is least beneficial to GoTo, from a strategic perspective, as it will result in a standoff between GoTo and Grab and set the stage for a battle royale between OVO, GoPay, ShopeePay, and Dana.”