Falcon Edge-backed MSwipe has set a target of disbursing ₹250 crore to over 10,000 merchants in its network in FY23. The B2B fintech start-up will also roll out two-wheeler and hospitalisation insurances to its merchants within the next three months, once it gets the awaited corporate agency license, a senior company executive said.

MSwipe’s lending arm known as MCapital was started last year, and has so far disbursed around ₹60 crore. The average ticket size of these loans has been around ₹2 lakh for 18 months. Currently, MSwipe has a network of 5,00,000 merchants for its Point of Sale (PoS) services across 600 cities. Last year, it also started allowing merchants to offer EMI at PoS to their customers.

Speaking to  BusinessLine, Ketan Patel, CEO, MSwipe, said, “I won’t be able to lend to all, but 10 per cent of them (total network of merchants) should be easily ‘lendable’. We started lending a year ago, initial results seemed promising. We started with 11 cities, now we are in 60 cities. My NPAs for 30 days plus is less than 1 per cent and for 90 days plus are less than 0.24 per cent. If you see RBI data, the merchant lending NPA rate is around 12 per cent. Ours is a small book, around ₹60 crore.”

Ketan Patel, CEO, MSwipe Technologies

Ketan Patel, CEO, MSwipe Technologies

Patel added, “My dream is to convert MSwipe into a digital bank focussed only on small merchants. Our insurance offering will start in three months, we did a pilot with 50 merchants. We are starting with simple products like 2-wheeler and hospitalisation insurance. We surveyed our half a million merchants, and all of them had at least one two-wheeler. Almost 80 per cent of two-wheelers in our country are not insured.”

In terms of revenue contribution, Patel expects lending, insurance and buy now pay later offering will soon account for 30-40 per cent of the total revenue while the remaining 60 per cent will come from payments.

Acquisition strategy

To launch its lending services, MSwipe acquired an NBFC last year. Given the funding dry out in the start-up ecosystem and possible consolidation of sectors like fintech, MSwipe will be on the lookout for strategic merger and acquisition bets to strengthen and expand NBFC business.

The start-up is also looking to expand into enterprise and government-related offerings.

“We are looking to acquire some of the industry players to strengthen our NBFC arm. We are looking for companies that add value to our business; something which we are not able to do on our own and it helps us reach our three-year goal whether in the lending or merchant acquiring space. We are also looking at companies where we feel the current cost structure is high right now, but with our control and ability to manage costs, we will be able to make that company profitable,” Patel said.

“From an acquisition strategy standpoint, we want to be the market leaders in the small merchant space. Enterprise and government are the new thrust that my focus is on. Government is a very good business, which not many aggregators are focussing on right now. We have got one of our best resources running this segment,” he added.

MSwipe is backed by Ratan Tata Associates, Falcon Edge, Matrix Capital Partners, B Capital, UC-RNT, DSG Partners and Epiq Capital.