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BW Businessworld

'We Are Working With Merchants And Banks, Not Competing With Them'

In a candid conversation with BW Businessworld, Bipin Preet Singh and Upasana Taku for the first time open up about the industry competition, e-wallet making loses and ongoing issues of KYC norms and potential UPI threat

Photo Credit : Tarun Gupta

PayTm War: 42% Share VS 4%
Bipin: Our approach is very different. Paytm's approach is very similar to Alibaba which is ' I am going to do everything on my own and we want to own assets. So we will do movies, travel, e-commerce and everything else ourselves.

It is not Paytm we are competing with but a Chinese owned Alibaba company. Will that company be able to dominate Indian based system in India? - Its is very challenging, given how the economy is set up and how sensitive the country is in terms of financial services.

Also, there approach is very different which is to dominate and try to own and do it the Alibaba way.We do not threaten but operate in a very conducive manner and taking the partnership based approach. Paytm will never get such partners in the ecosystem simply because the way they approach the market is far different compared to what we do.

Somebody like makemytrip, Myntra, ShopClues or others are willing to work with Mobikwik but not PayTm.

Upasana: Doing everything doesn't make you successful. For instance, Paytm has been trying to push in this market space(PayTm mall) for so long, they are no way close to Amazon or Flipkart. What is the point? In the process they have alienated so many other players  who are not willing to work with them.

To each on its own. They have their own strategy and we have ours and time will tell. Imagine Visa trying to do everything themselves from issuing cards without a bank to creating merchant network. Would they be as successful? I don't think so.

Bipin: We are the Visa of the mobile world where we work with the ecosystem and make mobile transactions happen.

Funding game - Was PayTm at advantage, during demonetisation? 
Bipin: In my view, it was specifically money game during that point of time. They had access to far more capital and they utilised it well. We were constrained on the capital side. Though we also did a quite bit of advertising. So, that's where they got the market share early on.

But all that came with a lot of baggage as well with stories of people loosing money at that time who were using PayTm. The systems was not very stable to scale up instantly. This also created challenges for the overall industry as people became wary about using wallets.

You can get boost from instances like demonetisation but ultimately it's a game where the tortoise wins. You keep building slowly and at the same time retain the trust of your consumers and partners.

Upasana: They may have spend a lot of money to get to 'whatever their real number users' is, but by the virtue of just 3 partners we have the potential of acquiring more than 260 million customers for free.

Burn on cash back -A passée?
Upasana: We believe in innovation. Cashback also by itself was something that we innovated, before others copied it. We have come up with the new concept of 'Supercash', where we encourage users to come back and do more and more transactions.

We just don't want the user for one transaction like PayTm or others have been doing for a long time. Buy this phone and get 10,000 cash back. Will take 10,000 and never return! .We don't want to build such vanity metrics but real user base for long term.

E-wallets survival- UPI a threat?
Bipin: Honestly, we have not seen any impact on our business with UPI. UPI is a switch to transfer money from one account to another. Payment business is much more complex and deeper than that. How are you supposed to make a payment to a petrol pump or shopkeeper using UPI? We are more user business case and purchase linked.

Plus, I have not seen a single merchant accepting UPI.

Upsana: UPI transactions are gaining traction according to RBI data but what it is replacing is NEFT or RTGS transactions. A bank transfer transaction is very different from purchase transaction.

New KYC norms- Too much of a shock to take or well-prepared?
Bipin: Its a mixed pack. A lot of companies were not doing enough to get high number of customers convert into KYC. Our take is that RBI should not mandate all the wallets to convert into full KYC, because then what will be the difference between a bank and a wallet, I could easily open a bank account.

We use wallets for convenience and that needs to continue.

Upasana: We have a goal of converting 20 million wallets into full KYC in the next one year which entails an expenditure of 100 crores. These are the 20 million users out of our 65 million who are the highest spenders and we want to know more about them.

Banks- Wallet killer or partner?
Bipin: So far banks have been seen as competitors to wallets. We do not believe in that at all. There are so many things that banks do, which are complimentary to us.

In a complex and vast country like India, it is not possible for Mobikwik alone to reach out to everyone. Therefore, there are captive user bases like Telecom companies, banks, financial services etc and we want to partner with them all, retain our brand, get the customers from these partnerships, co-own them and hence create more revenue lens.

Upasana: See there are more than 90 banks in India and there are only 2-3 banks which have their own payment app with almost no traction. Nobody uses those apps. Other banks are not even bothered to build one or get it outsourced.

Other progressive banks have realised that their forte is banking and ours is payments, user experience and we have already built cloud in terms of merchant network and user adoption. Then why should the banks waste their energy in doing all of that? Therefore collaboration is better for both of us. This way, banks also get to know more about their users spending habits.

109 crore loss- Breakeven too far?
Upasana: The losses are because we are still in a significant scale up mode. As an example we have acquired almost 2 million merchants in last 10 months. Apart from strategic partnerships we also run marketing campaigns to attract more users. Most of our significant spend is on marketing. If we were not to do the marketing, which we have done in some months , then we break even.


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