MobiKwik bullish on core business, buy-now-pay-later launched in May 2019

The firm currently has 22.3 mn pre-approved BNPL users and is handling over 4 mn such transactions a year. It is seeing 14x growth from a year ago

In the first quarter of this financial year, financial technology firm MobiKwik, which filed an initial public offering in July, acquired almost seven million users. It expects to get 20-30 million new users in this year, but with an IPO and larger proceeds in the bank, it will be investing more in user acquisition, merchant acquisition, and brand marketing, said co-founder and chief operating officer Upasana Taku.

The firm is firmly focused on two areas- payments, its core business, and Buy Now, Pay Later (BNPL), which it launched in May 2019. The firm currently has 22.3 million pre-approved BNPL users and is handling more than 4 million BNPL transactions annually. The company is seeing growth of 14x from a year ago.

According to its draft red herring prospectus, filed with the markets regulator Securities and Exchange Board of India (Sebi), as of March 31, 2021, MobiKwik had over 101.37 million registered users and more than 3.44 million online, offline and biller merchant partners.

The fastest growing business unit for MobiKwik, said Taku, is Buy Now Pay Later (BNPL), which is a business that the company started about three years ago. BNPL saw growth in users, number of transactions, and repeat rates.

The company has also built a credit scoring model based on a users' spending history from the MobiKwik wallet and products. These credit lines are available in the users' MobiKwik wallet, and they can draw them and use them to spend anywhere in India. After 15 days a bill is generated of all the spends the user has made, and they need to pay it back.

If the user pays back on time, there is zero interest to be paid. All users pay MobiKwik a one time activation fee of Rs 99, and in every cycle about 10-15 per cent people pay late, leading to the payment of a late fee. MobiKwik's primary revenue driver here is the merchant fee.

"It's a highly accretive business for us, it is also a highly repeat business. What we are seeing is that the number of users who activate their BNPL product which is called MobiKwik ZIP, their repeat rate is very high- about 82 per cent people are using the line in every 15 days cycle. There are also 24 sub-cycles in a year and 82 per cent people are repeating across those cycles. Our new user activation is very high, repeat rates are very high...the average spend per user in the beginning of the year used to be Rs 2000 per user per month. Now it is Rs 3,100-3,200 per user per month," said Taku.

While most industry reports expect BNPL in India to be a $50-60 billion opportunity by the year 2025, MobiKwik believes that it will be a $100 billion opportunity by 2025, she said.

MobiKwik is also looking at localising the language in parts of its products. "Our product is currently operating in English, but I believe we are looking at localizing it soon...at least some of the key menus. But if you are asking about users, most of our users tend to be from cities, not villages. But cities are not metros, and going from tier 1 to tier 2 is where we are seeing the fastest growth," Taku said.

During the pandemic, she added, one of the key learnings for the company was to stay on top of the game, but also to be more human. "A humanitarian and professional call we took is that we will not fire anyone during the pandemic. We did not fire a single person during the pandemic, neither did we do any pay cuts. In fact, on the contrary, we took a very opportunistic approach, where we hired 80 new engineers, because there were other companies that were firing people left, right and center last year at this time, and we tried to bring in more talent in the company," Taku said.