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Mobikwik sees ‘BNPL’ as its fastest growing business segment

IPO-bound One Mobikwik Systems (Mobikwik) sees it’s ‘Buy Now Pay Later’ product — which enjoys higher margins — as a major growth driver and it’s fastest growing business segment in the days to come, said Co-founder Upasana Taku.

This digital financial services firm is also aiming to launch its ₹1,900 crore initial public offering (IPO) by this month end, Taku told BusinessLine in an interview.

Growing market

The ‘Buy Now Pay Later’ (BNPL) product allows consumers to pay later in instalments with no additional costs for their purchases.

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It is a growing market in India and, over the last eighteen months, has expanded from a level of a few million dollars annually to about $1.5–2 billion in total transaction value.

“We see BNPL as a major growth driver in the days to come. All metrics associated with BNPL are growing rapidly. In fact, in Q1 of this fiscal, the gross merchandise value (GMV) was much more than what we clocked as GMV for BNPL in all of last year. Whether it be number of transactions, average ticket size (grown to ₹ 3,200) or the number of repeat users — all of them are growing,” she added.

Under-served segment

Mobikwik is one of the leading players of BNPL with an approved user base of 23 million.

“Our near term aspiration is to first take the number of our active BNPL users to the same level as credit card in force of the largest credit card issuer in the country,” Taku added.

Increased smartphone penetration, cheapest data plans and a boom in online shopping has propelled the demand for pay later products in the country. Given the under-penetration of financial markets, digital financial service providers see ample scope for growth in the country.

Well-differentiated offerings

Meanwhile, Mobikwik is looking to tap the IPO market at a time when several other digital businesses, including its competitor Paytm, are looking to come out with their own public offerings this quarter (Oct–Dec 2021).

Asked if she felt this crowding of internet businesses at the IPO market could affect Mobikwik’s prospects, she replied in the negative.

Also see: Mobikwik gets SEBI’s nod to float IPO

“There are several digital and tech companies coming to market. It is a good thing for India for the scale of GDP that it has. So far, there have been only three to four tech IPOs. India is going to have a booming high-growth internet economy for the next decade. We at Mobikwik are well positioned to ride on trend. Our business model is well-differentiated when compared to others. Hopefully, investors will understand this,” Taku said.

“Two pillars of our growth are consumer payments and BNPL. This is a unique and differentiated value proposition that we are going out with,” she said.

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