Indonesia’s local payments startup, Cashlez aims to bring security to cashless payments, reports Tech In Asia.

For the past 15-20 years, the only device Indonesians have known for card payments is ‘electronic draft capture’ (EDC). This refers to the device that cardholders use to swipe or tap their cards at a hotel or restaurant, or anywhere that accepts card payments.

There are 17 million credit cards in Indonesia, and 113 million debit cards, but only 1 million point-of-sales terminals where you can swipe your card. 

Banks lend the EDC to merchants and the merchants do the maintenance. Merchants need to be taught on how to void transactions, how to replace paper rolls for receipts, and so on. The hassle means banks only give EDC’s to high-end merchants.

Teddy Tee, Cashlez’s founder, sees that there should be better ways of handling cashless payments. There’s a huge gap between the number of cards already in circulation and acceptance points.

Tee believes that increasing card acceptance is a low hanging fruit because it doesn’t require merchants or customers to massively change their behavior.

What Cashlez does

The startup developed a card reader that’s more versatile than a traditional EDC. It connects to an app which merchants install on their phone. It runs on battery, and can be set up quickly with just a few taps. The device accepts cards from different banks, from debit to Visa and Mastercard.

The startup shares some resemblance with US app, Square and has regional competitors in Singapore’s SoftPay and GoSwift.

To Tee, overcoming Indonesia’s obvious infrastructure challenges are the best ways to probe Cashlez can handle complexity. Indonesia has two million registered small and medium enterprises.

There are millions more unregistered ones, mom and pop stores, bazaar sales people and more, who are currently being underserved as they cannot apply to get an EDC. 

The startup has been backed by Angel investors and is now raising a pre-series A round of approximately $2.5 million to reach the next stage. It makes money by sharing profits with its partners in the payment process. Each transaction has a fee of around 1.6-2%, depending on the card.

There are still challenges to the device, such as proof of payment, transaction fees and the sensitivity of the device. However, the challenges are very much entwined within the setup of the startup itself.

A version of this appeared in Tech In Asia on August 17. Read the full version here.

Payment cards on the rise rn Cambodia

VISA overtakes MasterCard in Cambodia, Source: Phnomphen Post

There has been a surge in both credit/debit card penetration and widespread acceptance in Cambodia according to Phnom Penh Post. MasterCard, the plastic payment-card brand of global financial services firm MasterCard Worldwide, has been present in the Kingdom since 2001, but until recently it was relatively unknown to most Cambodians.

To date, MasterCard has partnered with 13 banks – including six with foreign-owned banks – in Cambodia to deliver its products.

Currently, the total number of MasterCard credit and debit cards issued in Cambodia grew by 22% during the one year period through March 2016. The company recently announced a partnership with Cambodian bank Acleda, potentially accelerating growth within the next year.

MasterCard’s partnership with Acleda is a step towards a cashless society. The goal is to adopt and grow electronic payment methods and drive greater financial inclusion in the country.

1.4 million debit cards and almost 40,000 credit cards were issued in Cambodia last year. Acleda Bank was the largest single issuer of these cards, with almost 60% of debit cards and over a quarter of credit cards issued by them.

According to So Phonnary, Executive VP and Group COO of Acleda Bank, Cambodians are increasingly using MasterCard for electronic payments, which is why the bank decided it was time to issue its own MasterCard payment cards. Electronic banking is helping to develop payment systems in Cambodia, which can reduce dependency on cash based transactions.

There are also broader economic benefits in using credit and debit cards, cash printing and circulation can cost up from 0.5-1% of a nation’s GDP.

For an emerging market such as Cambodia, the small percentage fraction takes a considerable amount away from the country’s total GDP.

According to Limhong Fashion Shop, it is estimated that 30% of transactions made at the local store are either through MasterCard or Visa. This growth can potentially create more opportunities for ecommerce.

A version of this article appeared in Phnom Penh Post on June 6. Read the full version here.

Take Down Traditional Finance Companies


FinAccel is a new company that aims to take down traditional finance companies proposing a different approach: enabling a credit line for online purchases.

The company is based in Jakarta, Indonesia, and essentially acts as a layer between its credit card and lending company partners and consumers buying online.

Started last year by Akshay Garg, who founded ad tech firm Komli, ex-McKinsey consultant Umang Rustagi, and Alie Tan, formerly of a number of startups, the company has raised an undisclosed seed round, which TechCrunch understands to be more than $1 million, led by Jungle Ventures to get started.

The idea behind FinAccel is to disrupt the credit industry by enabling consumers to reap the benefits with a model that fits today’s digital era.

Initially in Indonesia only, customers have 30 days to repay the amount at no added cost, but the startup is planning to introduce credit card-style payback plans soon.

We are basically putting a virtual credit in hands of five to 10 million people in next five years[…].

We want to go hard against the consumer finance companies,” Garg said. “There’s a crazy amount of bullshit marketing in the industry today” justifying the willingness to take down traditional finance companies

The goal, he explained, is more than just beating existing finance companies, FinAccel wants to unlock new consumer spending opportunities, particularly in the ecommerce space.

FinAccel has plans to be present across Southeast Asia’s six main countries with an expansion that will likely kick off next year starting with Thailand.

The lack of credit cards in emerging markets like Southeast Asia is one of the major hurdles that online commerce companies are facing.

A version of this appeared in TechCruch on June 1. Read the full article here.