Facebook in early talks to launch mobile payment service in Indonesia

Bank Indonesia assistant governor Filianingsih Hendarta, who heads Payment system policy, told Reuters that three local firms had approached the regulator to ask about tentative approval for a payments partnership with Facebook.

WhatsApp had been in talks with these firms to launch digital payment services in Indonesia. (REUTERS)

Three Indonesian digital fintech firms are working with Facebook Inc to apply for regulatory approval to launch mobile payments in the country, an official at the financial regulator said.

The plan, if approved, could be among the first such service under the social media firm's unified payment service Facebook Pay it unveiled in November, through which users across its various platforms including WhatsApp and Instagram can make payments without exiting the app.

Bank Indonesia assistant governor Filianingsih Hendarta, who heads Payment system policy, told Reuters that three local firms had approached the regulator to ask about tentative approval for a payments partnership with Facebook.

"So far no one submitted the formal application. Some of them just came to discuss during the consultative meeting with BI (Bank Indonesia)," Hendarta said.

She said the three e-wallet operators are Indonesian ride hailing firm Gojek's GoPay, fintech startup OVO, which is owned by Indonesian conglomerate Lippo Group and is also backed by Singapore-based riding hailing firm Grab, and state-backed LinkAja. Four sources with knowledge of the matter said Facebook wants to capitalize on the Indonesian market and is preparing for regulatory approval in the country.

Reuters reported in August that Facebook's WhatsApp had been in talks with these firms to launch digital payment services in Indonesia.

A spokeswoman for Facebook said the company was seeking to bring digital payments to more countries and believed "digital payments will... open up extraordinary opportunities for businesses to grow." "We are in conversations with partners in Indonesia, however the discussions are ongoing and we do not have anything further to share at this stage," she added. OVO and Gojek declined to comment. LinkAja was not immediately available for comment.

Facebook is keen to accelerate its expansion in Southeast Asia. Indonesia, home to 260 million people and the region's largest economy, is one of the largest markets globally for Facebook and WhatsApp, with over 100 million users. Facebook is also in separate talks to partner with Gojek, which counts Alphabet's Google and Chinese e-commerce JD.com among its backers, two sources said. "The talks could lead either to a strategic partnership, a collaboration, or an investment," one person with knowledge of the matter said. The talks, which predate the coronavirus outbreak, are at an early stage.

Elsewhere in Asia, Facebook has held talks to buy a multi billion dollar stake in Indian conglomerate Reliance Industries Ltd's telecom unit, media reports said.

Gojek declined to comment. Facebook referred Reuters to its general statement. Having evolved from a ride-hailing service founded in 2010 to a one-stop app offering online payments, food ordering and even massage services, Gojek is valued at $10 billion.