E-wallet to financial services: How Mobikwik is changing tack

Chaitanya GudipatyMoneycontrolMobikwik is firming up plans to transform into a full-fledged financial services platform to offer users interest on money parked in its mobile wallet through tie-ups with instruments such as mutual funds. The mobile wallet operator also plans to offer loans to customers through banking collaborations and insurance services comparison. The move is aimed at acquiring new customers and retaining the existing ones while warding off the threat from newly-setup Airtel Payments Bank and India Post Payments Bank, and the upcoming Paytm Payments Bank."Mobikwik wants to be a port of call for digital transactions in India. This includes lending and financial services, where your payment app will be the one-click interface for online transactions," Bipin Preet Singh, Co-founder and Chief Executive of Mobikwik, told Moneycontrol in an exclusive interview.The Mobikwik CEO aims to complete the switch to financial services platform in the next 3-6 months.

Singh said that the company is in "advanced stages" of talks with mutual funds and banks. Mobikwik will seek permission from its wallet users to invest wallet money in mutual funds and customers can then earn interest on the investments made, he added. Withdrawing returns on investments will be quicker and fetch users larger returns than those made in savings bank accounts or bank fixed deposits. "Mobikwik will invest money in instruments where the risk is minimal," Singh said.The offerings will be compliant with the Reserve Bank of India regulations, Singh said. Righting the wrongsThis is not Mobikwik's first attempt to introduce interest on money stored in its wallet. In 2016, it had to withdraw its "annual profit" initiative to offer 6 percent interest on e-wallets having a minimum balance of Rs 5,000 after the Reserve Bank of India stepped in, citing norms that prohibit mobile wallet companies from doing so. Singh attributed the reason for the rollback to a "confusion in communication" with the central bank. This time around, Mobikwik has kept RBI in the loop about its plans to become a one-stop shop for financial services. "We are keeping the Reserve Bank of India informed about all the developments. The services will be launched after acquiring necessary approvals from RBI," Singh said.

Countering payments banks onslaughtMobikwik's push for a financial services platform comes at a time when Bharti Airtel is looking to drum up subscribers by  offering one-minute talktime for every rupee deposited in its payments bank savings account. Similarly, Vijay Shekhar Sharma's Paytm Payments Bank plans to cash in on its existing user base of Paytm wallet.Airtel Payments Bank, which added over 1 million accounts shortly after a pilot in November 2016, has committed an initial investment of Rs 3,000 crore to develop a pan-India banking network and digital payments ecosystem. Mobikwik wants to capitalise on the opportunity that its 45 million-strong user base and 10 lakh merchants on its platform offer. The Reserve Bank of India (RBI) mandates a cap of Rs 1 lakh on funds in payments bank accounts. E-wallet users can transact upto Rs 1 lakh per month only subject to successful KYC registration, failing which the transactions are capped at Rs 20,000 per month.Mobile wallet operators such as Mobikwik, Paytm, Freecharge and Oxigen have another battle on digital payments front — the government's BHIM app. According to RBI data, payment transaction value on Unified Payments Interface — the platform on which BHIM app runs on surged over 1,700 percent to Rs 1,660 crore from Rs 90 crore in November 2016. In contrast, payment transaction value of prepaid mobile instruments such as mobile wallets and prepaid cash cards grew a meagre 59 percent to Rs 2,100 crore from Rs 1,320 crore in November, RBI data shows.Investment & Hiring plansCurrently, Mobikwik is on a hiring spree and has made a few C-suite appointments. Earlier this month the company roped in former Crisil director Bikram Bir Singh as Business head."We will be investing over Rs 50 crore in setting up new offices to cater to regional requirements and will be hiring over 1,000 employees, pan India, across technical and non-technical requirements," MobiKwik said in a statement in January.

Last year, Mobikwik had raised USD 50 million in funding in a funding round led by Japanese payments firm GMO Payment Gateway and Taiwanese chipmaker MediaTek. Sequoia Capital, American Express, Cisco Investments and Treeline Asia figure among its other investors.