Digital wallet firm MobiKwik recently raised $25 million (Rs 155 crore) from investors like Tree Line Asia, Cisco Investments and Sequoia Capital.
Unlike most other companies that are moving from physical stores to online marketing, MobiKwik plans to expand among brick and mortar outlets to increase coverage of its mobile wallet. The start-up currently claims to have over 15 million users and 25,000 retailers who accept MobiKwik.
The company has applied for a payments bank license with the Reserve Bank. MobiKwik Founder and CEO Bipin Preet Singh told HuffPost that becoming a bank is very important for the business to scale up rapidly to a much bigger size, and that being a digital wallet alone won't get them there.
Q: Why do I need a digital wallet when I can easily use debit and credit cards, or online banking?
A: Many people do not have those options, or don't use them. The usage of debit cards for example, is low in India as people still prefer to pay in cash despite having that card. So for them this will be useful, as they can pay cash without having to carry that amount with them.
Secondly, you are always wondering if the payment channels are secure, and in the case of slow connections whether the payment was successful or not. With a digital wallet, those problems are taken care of, and you can make every day payments such as movie tickets, ordering pizzas and so on. The payment is fast and easy.
Q: So MobiKwik is similar to Paypal.
A: In many ways it is. You can pay your friend if he too has a MobiKwik account, and you can pay merchants for purchases. But we offer a different experience overall than Paypal.
Q: Why apply for a banking license when you can scale up MobiKwik by tying up with more merchants?
A: We will certainly do that and use the new round for funding for that. But with a banking license, we can overcome several limitations that we currently have. People have more trust on banks, and they will be more willing to store more in our digital wallet. They can earn an interest on that if we are bank. Today, they don't.
You can also get access to the cash in your wallet, because as a bank we can set up ATMs. But we won't be like an usual bank. Our emphasis will be on expanding our digital wallet business. And one way would be to reach people in areas which are economically unfeasible for banks because of the capital expenses involved, like the cost of setting up a branch, ATMs, and staff expenses. So they will be present in only those areas where people have a certain spending power. We can be everywhere.
Q: So you won't have branches and grow through tie-ups with stores?
A: A bank license will allow people to store much more funds in our digital wallet. And we will make it very convenient for them to put more cash in it or take cash out. You will be able to go to a neighborhood Cafe Coffee Day for that. They are in fact our existing partners. We will partner will many more such merchants so that you can do all your daily transactions through MobiKwik. Ultimately your vegetable seller will also have a MobiKwik account so there too you can pay through a digital wallet.
Q: But again, why would a customer not just do all of this through netbanking?
A: Because that experience is not necessarily great. You need to keep investing and innovating, which we as a digital business will do. For banks online banking is just one medium, and they are slow to catch on to latest technologies.
Q: What are your existing customers using MobiKwik for mostly?
A: We see a lot of business coming out of eBay, BookMyShow, PVR, Pepperfry, Snapdeal and similar such portals.
Q: You have focussed mainly on low-ticket items, given the limit of the wallet. Why is that?
A: The size limit right now is Rs 10,000 because we want to be your choice for everyday purchases, not big ticket items .If you are buying something for say Rs 50,000 you have several options already. Also, if we went beyond Rs 10,000, you have to get user information verified, which adds another layer to the job.
Q: What are your goals for the year?
A: We are confident of raising $100 million, and reach a million merchants by 2016. The potential market is huge, a $100 billion opportunity. We want to make the most of it.
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