MobiKwik to leverage US $ 45-50 billion estimated growth of Indian ‘Buy Now, Pay Later’ (BNPL) Market by 2026
India’s population is credit starved, reflected in the widening gap between the rapidly growing base of users transacting online, which currently stands at 250 million, compared to just 30-35 million unique credit card holders. Paucity of credit information on users and high cost for physically onboarding a large number of users have dissuaded financial institutions from trying to bridge this ever-widening gap. MobiKwik, India’s largest BNPL fintech (in terms of the total pre-approved users i.e 23+ million) is focused on addressing the unmet credit needs of the digitally savvy millennials from tier 1, tier 2 and tier 3 cities and towns of India. The company is well positioned to leverage on the Indian BNPL opportunity estimated to reach US $ 45-50 billion by 2026 (Source: RedSeer Report).
A large part of the Indian population continues to be unserved or underserved by the formal credit market, and as a result millions of people in India have either low or no access to credit or only have access to credit at very high interest rates.Large banks or NBFCs are hesitant to provide credit to people who are new to credit. As a result, India presents a huge consumer credit gap and has significant headroom for growth for credit card as well as other credit instruments, creating a growth opportunity, especially for technology first companies. BNPL user base is expected to reach approximately 80-100 million users by fiscal 2026, far surpassing the unique credit card user base.
With a focus on bridging this credit gap and providing the unserved Indian population their first credit experience, MobiKwik launched MobiKwik Zip, a flagship BNPL product in May 2019. It is currently one of the largest BNPL Fintech companies in India with 23+ million pre-approved BNPL users. The company is witnessing an exponential growth with an overall BNPL GMV grown by 22X. Repeat rates for MobiKwik’s BNPL users was at 80 % and average spend increased to ₹3,200.
MobiKwik Zip is an interest-free product with Rs. 500-30,000 credit limit available in the user’s MobiKwik Wallet with a one tap activation in 15-day cycles. At the end of the cycle, a user is required to pay the due amount within 5 days, failing which a late fee is charged. The user also pays a one-time activation fee. Users who have gone through multiple cycles on MobiKwik Zip and demonstrated good repayment behavior are offered Zip EMI. Zip EMI is focused on users who wish to purchase high value products with ticket size between Rs 25,000-100,000. The product is interest bearing and users repay through 3/6-monthEMIs. Currently, MobiKwik has partnered with 10 lending institutions namely IDFC First Bank, Fullerton, etc.MobiScore- a data science driven credit scoring algorithm is used by the company to analyze the consumer profile and assign a pre-approved limit to each customer.
MobiKwik’s consumer payment platform provides MobiKwik with 1) an existing base of 108m users, 2) rich user data history having handled >US$7bn worth of transactions just in the last 3 years, 3) KYC of c45m users, necessary for offering financial services and 4) 3.4m strong merchant ecosystem, where BNPL can be used, giving users a huge flexibility to transact for their daily life use cases. The combination of the above helps the company keep its user acquisition cost low, better assess user quality and provides amongst the widest merchant network across all BNPL players. Its consumer payment platform serving as its moat along with its razor-sharp focus on BNPL, the company is strongly positioned to leverage the fast-growing BNPL India USD $45-50 billion opportunity.