The 10-year-old digital payments firm is now reportedly generating a profit excluding interest, taxes, depreciation and amortization.

Digital payments firm MobiKwik turns cash flow positive
Atom Digital Payments Thursday, September 05, 2019 - 10:49
Written by  S. Mahadevan

Even as profitability remains a distant dream to most of the startup industry, digital payments major MobiKwik claims that it has started making operating profits and doesn’t have to engage in any cash burn anymore. The company told TechCrunch that it is generating a profit excluding interest, taxes, depreciation and amortization.

It has taken 10 years for the company to reach this position. Without pivoting its business model, the payments firm started offering financial services to its customers and found the solution to be successful, according to the founders of MobiKwik, Bipin Singh and Upasana Taku.

A few comparisons are indeed relevant. Paytm, a rival e-wallet cum payment startup has raised $2 billion till date against just $118 million by MobiKwik. The founders point out the conventional banks like ICICI bank have 15 to 20 million customers and they make profits. Digital payment firms like MobiKwik have 110 million customers but struggle to make money. Imagine these banks have physical offices and staff all over costing them a huge chunk that a digital firm does not have to bear.

MobiKwik says that it did its own analysis of the profile of its customers and realized that it could offer them small loans and be sure of recovering them. Many of these customers did not possess credit cards even. These loans which could start at just Rs 5,000 and going up to Rs 100,000 have been a great hit. The startup has disbursed loans worth $100 million so far through tie-ups with banks and 800,000 such loans have been sanctioned so far.

Almost on similar lines, the company started offering insurance products, it calls ‘sachet-sized’. You can buy an insurance at as low a premium as Rs 20. The coverage areas include cyber fraud, hospitalization, fire and accident.

All these changes mean MobiKwik is confident of posting a revenue of $69 million for this fiscal ending March 2020, up from $28 million. Therein lies a tale and many startups can learn from this experience and adjust their operations.

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