JAKARTA -- The venture capital unit of Indonesia's largest lender by assets, Bank Mandiri, on Wednesday said it is leading a $2 million funding round for local financial technology startup Cashlez, which claims to offer a portable, more user-friendly alternative to electronic data capture machines.
This is the seventh startup investment by Mandiri Capital Indonesia, and the third offering a payment solution. Since its establishment in January 2016, MCI has invested around 300 billion rupiah ($22.4 million) in fintech startups focusing on three areas: payment options, peer-to-peer lending and the so-called small enterprise solution.
Cashlez's "mobile point of sales" system runs on a slim card-reader device operated with a smartphone application. MCI President Eddi Danusaputro said mPOS is expected to provide a cashless payment alternative to merchants -- especially small and medium businesses operating in the provinces where unstable internet connection hinders the use of electronic data capture, or EDC, machines.
EDC machines, Danusaputro explained, require strong internet connections. But mPOS can be used "anywhere in Indonesia covered by internet," where smartphones can be used, said Teddy Setiawan Tee, president of Cashlez.
"This is very prospective in Indonesia because not all stores here have good, stable [internet] connection," Danusaputro said. "We want to help micro, small and medium enterprises with a smoother and more stable payment system."
Mandiri's nearly 300,000 EDC machines are currently in use in various stores and businesses across the country. Danusaputro said MCI will help promote the use of mPOS to the bank's merchant partners and others.
Tee said mPOS "works as good" as EDC machines, "and even better" -- it can process transactions of any locally and internationally issued debit and credit cards with the simple use of a card reader and a smartphone that are both portable.
Since its establishment in 2015, Cashlez has partnered with 1,000 merchants, mainly in big cities on Java island and some popular tourist destinations outside Java. It enjoys 15 billion rupiah in monthly transactions.
Tee said that with the help of the $2 million funding, Cashlez is targeting an additional 4,000 merchants, with 50 billion rupiahs in monthly transactions, by the end of the year. "And there remain huge potential for growth," he added. "There are 56 million micro, small and medium businesses in Indonesia. Mandiri has only deployed 300,000 EDC machines. A lot of [those businesses] are not yet handled."
MCI had previously invested in six other financial technology startups. They include Amartha, which offers peer-to-peer lending for micro and small businesses; Moka, whose mobile application can help businesses keep track of sales and inventory; and PrivyID, which facilitates the use of digital signatures for business transactions. Identities of the three other startups were not disclosed.
Danusaputro said MCI may invest in three or four other fintech startups by the end of the year.