Midtrans: Pay Online

Midtrans’ Ryu Kawano Suliawan has built the country’s largest online payment gateway.

One of the main obstacles to the growth of e-commerce remains the payment bottleneck. Even though about 72 million people shop online now, some 60% still pay via bank transfer, and 30% by conventional cash on delivery. Now, new financial technology (fintech) firms are springing up to change that situation.

Ryu Kawano Suliawan, 33, started PT Midtrans in 2012 to provide a gateway to simplify online payments. The firm is a joint venture between the Midplaza group, owned by Ryu’s father Rudy Suliawan, Japan e-commerce firm Netprice and Japan’s largest payment gateway Veritrans. The company integrates various payment methods such as e-money, direct debit and credit cards. Its main service is to authorize online payments, and provide secure transactions that protect customer data such as credit card numbers.

The company started with 15 people and 30 merchant partners but now Midtrans employs 170 people has more than 2,000 merchant partners, including big ones such as Garuda Indonesia and e-commerce firms Traveloka, Tokopedia, and Mataharimall. It has also just signed to handle Go-Jek’s online payment system Go-Pay. By offering 18 payment methods and having partnerships with many large banks including BNI, BCA, and Mandiri, Midtrans is now the biggest player in the payment getaway industry, ahead of rivals such as Doku, which started earlier in 2007.

The competition in the payment gateway space right now is concentrated—Midtrans is only one of four main firms in the sector. Ryu says he would actually prefer to have more competitors. “We believe that with more players in the market, the easier it is to educate the target market,” Ryu says.

Ryu was already familiar with the financial industry before he decided to build Midtrans. After graduating with a Harvard MBA, he worked as an analyst at the San Francisco office of Lazard Freres and then at the Texas Pacific Group in Tokyo. Seeing the trend of e-commerce and the payment getaway industry around the world, he decided to launch Midtrans, betting that Indonesia would follow the same trends. He now admits, however, that Indonesians may be slower to adapt to e-payments than he expected—yet he remains confident. “As long as Indonesian e-commerce is growing, we believe we will grow,” he says.

The company earns revenue from a service fee per transaction set between Rp 2,500 to Rp 5,000. Midtrans declines to share its annual transaction value and market share except that its revenue is tripling every year. However, Forbes Indonesia estimates the company might have handled about $7.5 billion in transactions last year.

Published on Forbes Indonesia Financial Revolution issue (03/17). Read full version of the article here.