MobiKwik raises $40 million from Nasdaq-listed Net1

Gurgaon-based digital wallet start-up MobiKwik has raised $40 million (nearly Rs 270 crore) from Net1, a South African payments technology entity specialising in developing solutions for the unbanked in developing nations. 

Net1 is listed on Nasdaq, the American stock exchange, and has a market capitalisation of $482 million.

The investment comes with a partnership between the two, which will see the integration of Net1’s virtual card technology within MobiKwik’s digital wallet. The move will open new modes of accepting payments for the Indian entity's 100,000 merchants.

“Our strategic investment in MobiKwik provides us with meaningful participation in one of the largest and fastest growing digital payment markets globally,” said Serge Belamant, chairman and chief executive of Net1. "This investment will accelerate our ability to build scale in India.”

With Net1’s experience in building solutions for users in Africa’s hinterland, MobiKwik could gain an edge over rivals such as Novopay which are heavily focused on serving rural customers in India. More, both companies share the same goal of enabling low-cost cashless transactions which giants such as Visa and MasterCard can’t. 

Financial technology has emerged as one of the strongest sectors in India’s start-up space, with entities such as Paytm and FreeCharge emerging as large players. Paytm, largest in the space, claims to have over 100 million users on its platform. It is backed by Ant Financials, payments arm of Chinese e-commerce giant Alibaba.

“We…look forward to learning from their (Net1) best practices in serving un-banked and under-banked users, while taking progressive steps towards making India a cashless economy,” said Upasana Taku, co-founder of MobiKwik.

Over the next three years, MobiKwik says, it aims at having 150 million users on its platform, with 500,000 merchants which accept payments through its wallet. The partnership with Net1 will allow MobiKwik customers to use their smartphones as authentication devices rather than physical cards, a technology which is only now kicking off in India, with support from the country’s central bank.