We are neck and neck with Paytm: MobiKwik's Mrinal Sinha

Digital wallet firm MobiKwik is betting big on the offline space and expects the biggest chunk of its business coming from this segment in the next 18-24 months. The Gurgaon-based company aims to increase the number of users almost five-fold within two years and says it is set to cross $2 billion in transactions this year.

The company last week raised $40 million from South African payments firm Net1, taking the total it has secured so far in funding to $120 million from marquee investors such as Sequoia Capital, American Express, Cisco Investments and MediaTek. In an interview, chief operating officer Mrinal Sinha talks about MobiKwik's priorities, the annual profit scheme that was scrapped in less than a week, competition with Paytm and other issues. Excerpts:

What are MobiKwik's top priorities right now?  

Currently, we have just above 32 million wallet users. Our first target is to get 150 million users on our wallet in the next 18-24 months.

The offline space is growing tremendously for MobiKwik. It is the only wallet player with wide acceptance at brick-and-mortar stores such as Big Bazaar, Allen Solly, Louis Phillips, Apollo Pharmacy, Barista etc. We had a great start and a significant value of transactions is coming from the offline space. The idea is to continue this integration and accelerate our offline so that the biggest chunk of our business comes from this segment. In the next 18-24 months, we expect the offline segment to overtake other segments such as e-commerce, recharges/bill payments.We are planning to make it a very good line of business.

Third, MobiKwik is turning into a platform for other financial services such as investments and credit. We have done some pilots in credit lending, and now we are looking to take it to a scale in a manner that is compliant.

Are bill payments and recharges the biggest stream for MobiKwik wallet? What percentage share of your wallet business comes from recharge, bill payments and e-commerce?

We divide it into three segments – bill payments/recharges, e-commerce (merchants), and offline. In terms of revenue percentage share, we are well divided with 40% revenue coming from the bill payments/recharges segment, 40% from e-commerce and 20% from offline.

MobiKwik was the first one to launch a 'cash pick up' service for wallet loading. How is it doing?

Our 'Cash Pick Up' service has been growing exponentially, at the rate of 75% month-on-month since its launch in October last year. A lot of people are using it. Moreover, there are a lot of e-commerce merchants who just love it because it helps them replace 'cash on delivery' for their orders. The early response is overwhelming. People who might have net banking, debit and credit cards but are not comfortable sharing or filling in such details are using this service. This service allows users to add cash directly to their MobiKwik wallet from the comfort of their home or office. The service allows anywhere from Rs 100 to Rs 10,000 to be added to the user's wallet in real time. We have tens of crores of rupees being loaded on the wallet through this service.

Could you provide an update on the micro loans that you've started offering to users?  

We started a pilot with a closed group of users who we identified as creditworthy based on their detailed transaction history with us, and 50-60% of them have actually signed for it. We have 100% repayment rates. Now, our plan is to roll out  the product for masses in next six months.

In June, MobiKwik announced a '6% annual profit' scheme, which somewhat looked like 'interest' that only banks are allowed to offer? Within a week the company had to scrap the offer due to regulatory issues. Could you please shed some light on that?

MobiKwik is in the process of explaining it to the Reserve Bank of India (RBI). I cannot talk on behalf of the RBI, but our case is well-reasoned and I would say we have convinced the body of law. We are confident enough of re-launching the service in the market.

But, isn't the payments bank licence all about offering 'annual interest' to wallet users? And, MobiKwik rolled out the annual profit scheme without having a payments bank licence?

One or two players should not have an advantage. What's right for the country is right for the country's consumers, and if it is compliant, it is compliant. If somebody doesn't like it, too bad, go home. We are 100% sure of bringing back the scheme to the market.

How is competition with market leader Paytm, which claims to have about 100 million users?

Who says Paytm is market leader? I think that people make very big statements. What does No.1 mean, and in terms of what? Paytm's app installs on Google Play show between 10-50 million and same goes for MobiKwik, so how do they claim to have 100 million users on their platform. MobiKwik and Paytm are pretty much neck-to-neck. Yes, we do see Paytm as competition and FreeCharge is also a competition.

With payments bank in place, do you think Paytm is going to take away a big share of the pie?

Business in India has a problem. The problem is that we Indians think that a government licence is equal to a business. But it's not, and especially in the consumer space. We, in India, imagine that a licence will get us business. That may not be necessarily true. In this case, many people got the licence but found out that they couldn't build businesses around it so they surrendered the licence. Therefore, my question is what will Paytm do differently with a payments bank licence?

Then, why did MobiKwik apply for the licence?

We applied for it because a set of people believed that it would be a decent option for us to have. Is the business model under that completely clear for any player, including Paytm or us? The answer is 'No'. Otherwise, we would not have seen the biggest capital holders of the country exiting and surrendering the payments bank licence. There's nothing different between having a payments bank licence and a wallet licence in terms of the value add you can offer to consumers.

How is MobiKwik performing? We have started seeing consolidation happening in almost every sector. Can we expect some mergers and acquisitions in the online wallet space, too?

We are very near break-even. The company can break even this month, which also means we will grow a little bit less. That's something management needs to manage, whether we can grow more and be less profitable, or grow less and be more profitable. MobiKwik aims to maintain a very small sustainable burn.

We keep looking for interesting companies to acquire. We see the market as emerging into one and that means three-four players will exist in this market, and rest all will consolidate. We are definitely one of those, and we are definitely looking for such opportunities.

India is going to be a fin-tech market and banks are old-school…and too old-school for the ways of the world and what people want. We might see wallet users surpassing traditional banking users in the future. The writing on the wall is there for all to see.

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