Financial services drive bulk of MobiKwik’s growth – Banking & Finance News

While all digital payment platforms have diversified their revenue streams beyond low-margin payment services, Gurugram-based fintech MobiKwik has seen its credit offerings grow significantly, now forming a larger portion of its revenue. This contrasts with larger rivals like Paytm and PhonePe, which have scaled their financial products, but whose core payment businesses still dominate these newer segments.

In FY24, MobiKwik’s financial services segment, including credit and insurance products, accounted for 64% of the company’s overall revenue, up from less than 20% in FY22. In contrast, the share of revenue from its payments business shrank to 36% in FY24, from 81% in FY22. In absolute terms, nearly Rs 558 crore of its Rs 875 crore topline came from financial services.

MobiKwik, which is set to hit the bourses later this month, has two broad operational segments- its consumer payments business where it offers wallets, UPI, and utility bill payments and its financial services business, which largely involves credit distribution to merchants and individuals and contributed 64% of overall revenue in FY24.

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Its largest credit product in terms of disbursement is MobiKwik ZIP- a 30-day interest-free buy-now-pay-later product that offers loans of Rs 1,000 to Rs 60,000. In FY24, disbursements under MobiKwik ZIP rose to Rs 6,070 crore, from Rs 4,103 crore a year ago. As of the June quarter, 6.2 million users, out of the 60.5 million total active users on its platform, used the BNPL product.

The second popular credit offering is ZIP EMI, which offers personal loans between Rs 10,000 to Rs 2 lakh, with a longer tenure of 3 to 24 months and interest rates typically ranging between 18-36%. Disbursements under ZIP EMI jumped 3x to Rs 3,023 crore in FY24 from Rs 1,012 crore in the preceding fiscal. As of June 30, 2024, 1 million of its users opted for ZIP EMI loans.

“While our financial services business also includes our investment businesses (such as distribution of mutual funds, digital gold and insurance products), revenues from these products have historically comprised an insignificant portion of our revenue from operations,” the company noted in its IPO documents.

However, this is not the case for Paytm. Unlike MobiKwik, Paytm still derives the majority of its revenue from payment services despite efforts to diversify into lending, insurance, wealth management. In FY24, revenue from payment services accounted for 62.5% of the total operating revenue, while income from financial services formed 20%. Even in Q2 FY25, income from payment services accounted for 59% of the total revenue.

Similarly, for Walmart-backed PhonePe, payment services contributed the majority of its revenue in FY24, which jumped 74% to Rs 5,064 crore. The standalone payments business recorded an adjusted profit of Rs 710 crore during this period, compared to a loss of Rs 194 crore in the previous fiscal year.