Singapore-based ride-sharing company Grab is looking to expand its reach in Indonesia through its acquisition of Kudo, an e-commerce platform for unbanked consumers that could complement Grab's own digital payment platform and provide even more cash options.

Consumers in Southeast Asia seeking rides from a taxi or private driver are likely to do so through Grab, the region's answer to Uber or Lyft. But the irony of the ride-sharing boom is that, in providing a long-overdue modernization of the way drivers accept payments, it seeks to digitize payments even though a cash option remains in the process.

Kudo, which is based in Jakarta, brings a cash option to the forefront for those shopping online. Consumers without bank accounts or cards can use Kudo to purchase goods or services online, then make cash payments to a local Kudo agent. Kudo's network of 4,000 agents covers 500 towns and regions across Indonesia and has more than 5 million active customers.

A Grab-branded taxi
Bloomberg News

It's a similar model to the recently announced Amazon Cash, as well as older offerings such as Walmart's Pay with Cash, PayPal's MyCash Card or PayNearMe.

Grab claims its GrabPay mobile payment service is growing and Grab has 95% market share in Singapore's ride-hailing industry. In obtaining Kudo as part of its overall $700 million "Grab for Indonesia" 2020 master plan, the company seeks to bring financial inclusion to the forefront through its various mobile payment offerings.

"Indonesia is one of the most promising and fastest growing ecommerce and cashless payments markets in Asia, but there is a clear need for more flexible and tailored cashless payments solutions," said Ming Maa, president of Grab.

About 175 million Indonesians are classified as middle class, yet the majority of people are unbanked or underbanked, particularly in non-urban areas, Maa said. "Kudo has created a truly unique solution to the challenge of serving this massive, underserved market."

Currently, Grab users have various mobile options to choose from including GrabTaxi or GrabCar, or simply having GrabPay on their phones with a linked card or account to make payments at participating retailers. Top-up options such as GrabPay Credits and a loyalty program called GrabRewards in which points are earned for each Grab ride also exist.

"GrabPay represents a huge market opportunity for us, and it's something we think we are uniquely positioned to bring to the table," Maa said. "Across the region, there remains large potential for cashless payments solutions to increase from their small scale today."

Because GrabPay is the largest high-frequency mobile app in Southeast Asia, the company is in a good position to leverage it through Kudo and advance its use cases.

"Our goal is to make it as easy as possible for users to adopt and integrate GrabPay into their lives," Maa said. "Whether that's working with major local banks or integrating with existing local services."

Grab recently announced that Jason Thompson, a former executive with Euronet, will head Grab's payments strategy team to increase mobile payments services across the region.

The company's master plan calls for an initial focus on serving smaller cities and communities not yet involved in a digital economy, Maa said.

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