MobiKwik Jumps On The Merchant Lending Bandwagon To Increase Revenue

Following in the footsteps of its rivals such as PhonePe and Paytm, fintech unicorn MobiKwik is reportedly planning to foray into the business-to-business (B2B) merchant lending space.

MobiKwik plans to offer mid-size and small-ticket loans to its existing merchants to expand its revenue base.

Upasana Taku, cofounder and chief operating officer of MobiKwik, told Moneycontrol that the fintech major is experimenting with a few merchant lending products currently. While it is yet to launch the product and is experimenting with its existing merchants, Mobikwik will be majorly targeting Tier II and III cities for small and medium enterprises (SMEs) for their working capital needs.

“We have been scaling lending in a very healthy manner. For Mobikwik, the lending business disbursals in FY21 were around INR 300 Cr, and in FY22 it was INR 5,100 Cr. Going ahead, it will be large with newer lending products,” Taku said.

Founded in 2009 by Bipin Preet Singh and Upasana Taku, MobiKwik is a digital banking platform that offers a suite of financial products for both consumers and merchants. Its products range from payments and digital credit to investments. The startup joined the unicorn club in October 2021.

In the credit segment, MobiKwik focuses on middle India with its BNPL and other products. Currently, the fintech unicorn offers loan products in partnership with large banks and NBFCs.

“The loans are not on our balance sheet; they are with banks and NBFCs. This has been adding a lot of revenues to us and doing very well…Our customer repeat rate for all our credit products is around 80-90 percent,” Taku said as quoted in the report.

Earlier this year, PhonePe also launched a merchant lending marketplace where banks and NBFCs will be able to offer credit to its merchant base.

In addition, Paytm’s loan distribution business continues to scale up, as the fintech giant disbursed 43 Lakh loans worth INR 5,194 Cr ($632 Mn) in July. Paytm added that it was working on expanding its lending partnerships to further grow its loan book.

Meanwhile, MobiKwik recently claimed that it turned profitable in the first quarter (Q1) of the current financial year (FY24). The fintech unicorn said it generated a profit after tax (PAT) of INR 3 Cr and an adjusted EBITDA of INR 13.6 Cr in Q1 FY24. Its adjusted EBITDA stood at INR 3 Cr in Q4 FY23.

While the startup is yet to file its FY23 financial statements, it has claimed to have ended FY23 with INR 560 Cr in revenue. In FY22, MobiKwik reported a net loss of 128.2 Cr and revenue of INR 526.5 Cr.

As per Inc42’s State Of Indian Fintech Report Q1 2023, the lendingtech opportunity is estimated to grow to a size of $270 Bn by 2030. While most of the fintech players began with focus on consumer lending, the interest in merchant lending is picking up gradually.