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MUMBAI : MobiKwik’s Buy Now Pay Later (BNPL) offering is focused on individuals who are currently not served by credit card providers. Upasana Taku, co-founder, of the fintech company tells Mint about this and more. Edited excerpts of an interview:

MobiKwik has 108 million users. What is the take up of BNPL both in terms of number of users and money?

Out of our 108 million users, 45 million have their KYC done. Out of these 23 million are pre-approved for BNPL. The repeat user proportion has also gone up from 79% in FY 2020-21 to 82% in the June quarter. The average spend per user is 3189. The gross merchandise value (GMV) stands at 2.4 billion for the June quarter. We have a network of 3.5 million merchants where the BNPL programme can be used, including online and offline merchants. Also, we issue a prepaid card to our customers through which they can avail of BNPL even at merchants who are not part of this network. A third factor that extends our reach is QR codes. These are interoperable and hence even merchants who are not part of our network can be paid through BNPL using QR codes.

How does your BNPL product work?

Our BNPL product, MobiKwik Zip is aimed at individuals who would not otherwise get credit through credit cards. These are people in the informal sector. We offer this product for spending in the 500 to 30,000 range per user per cycle. These are people that banks with heavy branch networks or business correspondents cannot profitably serve via credit cards. Zip has a 15-day interest-free period. Upon the completion of this period, a bill is generated which has to be paid in 5 days. If the customer does not pay the bill, we charge a late fee. Those who pay consistently get upgraded to a status we are able to give them a bigger credit line. Customers also get rewards under our Supercash loyalty programme. The credit history of our borrowers is reported to credit bureaus allowing these individuals to build a credit history for the first time.

How does MobiKwik make money from BNPL?

We charge an activation fee of 99 for each BNPL customer. Our primary revenue comes from the merchant where the user spends with the Pay Later limit. We charge merchants a 2% fee similar to credit card. Then there is the late fee paid by those users who pay late. On average, the late fee works out to 2% of the GMV.

What is the default rate?

For MobiKwik Zip, we provisioned for an expected credit loss (ECL) of 1.89% for FY 20 and 5% for FY 21 as shown in our IPO prospectus.

You provide a guarantee to your banking partners against defaults?

Yes, we do. Our credit underwriting is done based on our machine learning model built on top of our proprietary user data although our lending partners also have their own standards which we incorporate. This is why we provide a ‘first loss’ guarantee up to 7% of the outstanding book.





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