Indonesia is not only the most populous country in Southeast Asia, but also one of the fastest growing economies in the world. But many people, especially outside major cities, still lack access to basic financial services like bank accounts. payfazz is one of many tech startups focused on solving this problem by finding innovative ways to give more Indonesians access to financial services. The company announced today that it has raised a $53 million Series B round led by B Capital and Insignia Ventures Partners.

Previous investors including Tiger Global, Y Combinator and ACE & Company also returned for the round. Among the new backers is strategic investor BRI Ventures, the venture capital arm of BRI, one of Indonesia’s largest banks. Payfazz’s latest funding round was a $21 million Series A announced in September 2018, led by Tiger Global. Its total raised to date is now over $74 million.

Founded in 2016 by Hendra Kwik, Jefriyanto Winata and Ricky Winata, Payfazz is an alumnus of Y Combinator’s accelerator program.

There is a growing list of Indonesian financial tech startups, including Modalku, KoinWorks and Kredivo, which focus on consumer and small business financing, while larger and more diverse tech companies like Gojek and Grab operate their own financing tools. online payment and other services. Payfazz differentiates itself with a portfolio of mobile services that make it easier for Indonesians to manage everyday financial tasks, including bill payments and loans, even if they live in rural areas without banks. The company says it currently serves 10 million monthly active users and plans to expand its offerings to include more digital financial products.

The company uses a network of financial agents to reach customers because many banks don’t open branches in rural areas, Kwik told TechCrunch. “Due to high fixed costs, traditional banks find it economical to operate only in cities and urban areas with high density and heavy foot traffic,” he said. “This leaves a huge unmet and underserved banking need in rural areas where access to banking services is very difficult.”

Payfazz’s network currently includes around 250,000 agents, most of which are located in small stores. Users deposit money with agents, who act as intermediaries with banks. This allows Payfazz users to have a balance that they can use to pay phone, electricity and other bills. Payfazz also recently launched loans and payments for offline retailers.

Kwik said Payfazz has built a network of agents because even though smartphone penetration is high in Indonesia, many people have never used direct digital banking before, so talking to a Payfazz agent helps familiarize them. with the process. Because most of its agents are based in warung or kirana stores, or neighborhood stores that sell food and other necessities, they are easier to reach for people in rural areas and communities. small towns than banks, ATMs or convenience store chains.

“Our agents are small businesses and people who have a lot of traffic from people in rural areas back home. It could be warung and kirana stores, telecommunications stores, small restaurants or even someone’s house,” Kwik said. “They are the perfect profile to become our agents as they are ubiquitous and have high coverage in rural areas.”

He added that Payfazz also gives agents the opportunity to earn additional income. Payfazz takes a commission of 0.5% to 1% on each transaction, and agents are allowed to set the margins they charge customers for transactions, usually between 5% and 9%. Before signing an agent, Payfazz screens them using KYC (“know your customer”) and verification technology to assess reliability, traffic, and sales potential.

While Grab Financial and other Southeast Asian fintech companies could eventually become competitors to Payfazz, Kwik said he is currently considering them as potential partners.

“The reason is simply that most of these providers still concentrate their market and resources in cities and urban areas, like many traditional banks. Meanwhile, Payfazz concentrates all of its market and resources in rural areas,” he added. “Payfazz can help other banks and financial service providers extend their reach to rural areas and capture hundreds of millions of users and billions of dollars in revenue opportunities there.”

In a statement on the funding, Insignia Ventures Founding Managing Partner Yinglan Tan said, “We have been privileged to have supported Payfazz since its inception. We believe this path to take their fintech ecosystem from Indonesia to the rest of the region will meet the pressing needs of many other Southeast Asian digital consumers, and we are excited to see how Hendra and the Payfazz team will rely on the portfolio. of services that millions of Indonesians already use.