‘We want to have more ‘buy now, pay later’ customers than any card company’

Founded in 2009 by husband-wife duo Bipin Preet Singh and Upasana Taku, MobiKwik is waiting to get listed this year along with several other fintech giants including Paytm and PolicyBazaar. Ahead of the ₹1,900-crore IPO, MobiKwik’s co-founder, chairperson and COO Upasana Taku gave BusinessLine a glimpse into what’s ahead for the payments company and its roadmap post the listing.

How do you plan to deploy the fundsraised through the IPO?

We are planning to infuse it back into the company. We will be investing in user and merchant acquisition. We will also be investing more in brand marketing, which we were a bit shy about in the past. Given how large both payments and ‘buy now pay later’ (BNPL) opportunities are we will be investing there as well.

Do you plan to enter any other business streams in financial services?

We already have an insurance distribution licence from IRDAI. We have teams, capabilities and products in partnership with insurance companies on our platform. We have an investment advisory licence from Sebi and direct mutual fund investment products, liquid funds, deposits, gold on our platform. So, we are building insurtech and investment tech as smaller business streams, but they are still nascent. We expect them to grow in 2-3 years.

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From a larger perspective, 70 per cent of the revenue growth today comes from consumer payments, 20 per cent from the BNPL business, and 10 per cent from the cross-sell business. After 2-3 years, BNPL and payments will bring 40 per cent and 50 per cent revenue, respectively, because the margins in consumer payments is 1.8 per cent while it is about 4.5 per cent for every cycle in the BNPL business. That’s why we expect the revenue share to grow faster in BNPL.

How big is the BNPL opportunity in India?

In India, especially, given that we have only 35 million credit card customers and 250-300 million digitally paying users, this gap is already big. In the next five years, we’ll have 700 million digitally paying users and still only 40-50 million credit card users. BNPL is a very large opportunity. Industry reports say it will be a $50-60-billion opportunity; I feel it will be a $100-billion opportunity in the next two years. We are focused on using our structural advantages to build the ‘buy now, pay later’ category.

Other sectors and traditional banks are also trying to sell digital financial services, especially BNPL. How will MobiKwik strategise differently?

It’s a big market and there will be many people trying to enter. There are some big contenders. Firstly banks and NBFCs, but I don’t see any major competition from them. Most of their distribution is via branches and direct sales agents. It’s completely physical in nature and their operating cost is very high, so they can’t do ₹3,000-5,000 credit products because they can’t make money, given the higher costs.

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It’s not the same for MobiKwik; we are a payments platform with millions of users, and how they are spending the money is in our records. Also, as a wallet and a licensed entity, we have to do KYC [know-your-customer verification] too. We are well poised to leverage this trend of BNPL. Being fully digital we can make money even on a 500-rupee note, apart from having a robust user base.

What about the new-age fintechs?

Other younger and smaller fintech start-ups, much like us, have learned to use AI [artificial intelligence] and ML [machine learning] to track alternative and abstract data points but they have significant challenges when it comes to getting scale. We have 108 million registered users. They don’t have KYC-ed users while we have 45 million KYC-ed users. That’s going to take time and billions of dollars for them to reach. We also have 3.5 million merchants. We have a card through which users can pay anywhere, we have 75,000 e-commerce platforms and apps.

Currently, we have 23 million users for our ‘buy now, pay later’ product. Our end goal is to have a bigger active BNPL user base than any credit card company in India. The top ones have 12-13 million customers as of now. Though our pre-approved user base is already large, we want to convert that to active users quickly.

When do you see the company breaking even?

All our businesses are contribution-margin profitable over the last two years. In the coming few years, too, we plan to continue investing; in the short term the losses will go up, but on a fixed cost the contribution margin will still be profitable. Overall, EBITDA-level profitability is still a few years away.

It was alleged in March that MobiKwik data was breached. Why didn’t the company disclose this on its own before it became known through some ethical hacker?

Firstly, our public statement is out there on our social media profiles where we have denied any breach in the system and even appointed a forensic auditor, and they too didn’t find any breach.

In terms of long-term user security and platform strength and privacy, we have beefed up our teams and quarterly audit processes for all our technology infrastructure. I want to assure you that we have quarterly, semi-annual and annual audits because we are an RBI-regulated entity. We also have licences from IRDAI and Sebi, and have to regularly send reports. After becoming a listed company, of course, the scrutiny bar goes up and we are preparing for that.

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