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Ayoconnect’s direct debit API helps Indonesians worry less about bills

Ayoconnect, Southeast Asia’s top fintech API platform, is now offering a direct debit service that lets banks, retailers, and other businesses in Indonesia get authorization from consumers for recurring payments. Through the service, consumers no longer need to remember to pay their bills on time each month.

Beyond direct deposit, Ayoconnect also enables businesses to use APIs for other fintech services developed internally. The company has already finished the underlying infrastructure for doing so. As an example, the startup is now allowing for virtual card numbers, a service that increases the security around internet bill payments by issuing temporary account numbers for consumers during online transactions.

To help power the startup’s expansion, Ayoconnect raised US$15 million in series B funding in January 2022 in a round led by Tiger Global. Ayoconnect then quickly followed up in February with a US$13 million round of series B+ funding led by SIG Capital Ventures.

According to Jakob Rost, the company’s co-founder and CEO, Ayoconnect is getting ready to move beyond billing by offering APIs for more complex areas such as loans, mortgages, and pensions. The overall plan is to prevent banks and other businesses from having to reinvent the wheel each time by building these services in-house. 

Before launching Ayoconnect in 2016, Jakob was employed as a cross-border CCO at Lazada. His eclectic resume includes earlier roles with Boston Consulting Group, JP Morgan Chase, and Siemens. 

In a recent podcast with Alan Hellawell, senior advisor and venture partner at AC Ventures, Jakob drilled into topics like why he started Ayoconnect, the reasons for the initial focus on bill payment, and the need for direct debit services in Indonesia.

Ayoconnect’s direct debit API helps Indonesians worry less about bills

The transcript below has been condensed and edited for focus and clarity.

Where did the original idea for Ayoconnect come from?

Being with Lazada really helped me understand the market. On the financial inclusion side of things, payments were always a gap for us when we operated e-commerce in the early days. 

So for me, it was pretty clear that fintech was the next big frontier, and we actually started approaching the business as though we were consumers ourselves.

My co-founders and I decided that we wanted to make it easier for consumers to carry out financial transactions online, especially in mobile environments. 

Why is the initial focus at Ayoconnect on bill payment?

At the end of the day, bill payment is the biggest basic financial use case in Indonesia. Among all the 270 million people in the country, that’s something consumers might need to do ten to 15 times per month, whether it’s phone credit, water, gas, electricity, insurance, taxes, or loan repayments, for example. Bill payment is something people need to do on a recurring basis. 

What challenges have you faced along the way? 

This is an experience we wanted to bring online, and we were actually the first ones in Indonesia to do so. But we found that there was really no infrastructure layer below the existing service. So we had to build all the integrations, all the pipes, and the entire infrastructure ourselves.

Tell us more about Ayoconnect’s new direct debit service.

Direct debit is a use case that exists in almost every market around the world. It’s been successfully done in Europe since the 1980s. 

However, Indonesia didn’t have a direct debit champion. This meant that most payments needed to be triggered from a consumer proactively every single month. So if you’re a lending company or an insurance business, for example, and you need to collect recurring payments from your users every single month, you more or less had to just hope that the customer would remember to pay you on time. That’s a giant inefficiency in the market.

Where is Ayoconnect headed in the future?

Now, many big companies, like Netflix and Spotify, use credit cards for bill payments, right? But for recurring payments, credit card penetration in Indonesia is, and will always be, very low. 

So that’s why we’ve built the first direct debit API in Indonesia. It took us 24 months to get it off the ground, but we are finally here.

Our service, which is widely used by banks and businesses, never says that the API is provided by Ayoconnect or anything like that. The API is completely embedded into the ecosystems of our clients. This is an approach we’re now replicating with other use cases, as well. We’re very excited to see where things go. 

Get the full episode for free on Spotify, Apple, and Indo Tekno.

Ayoconnect on how to revolutionize fintech in Indonesia

See also: Ayoconnect is evolving from open banking to open finance

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AC Ventures is a leading venture capital firm investing in early-stage startups focused on Southeast Asia. We are a generational partner to founders driving positive environmental, societal, and economic impact. If your institution seeks to deploy smart capital in the market, please get in touch.  

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