INTERVIEW: Mobikwik’s Upasana Taku says all the companies that made their grand entry into BNPL will have a grand exit too

• Upasana Taku of Mobikwik believes that it's not as easy as some companies are making it out to be.
• The company claims to be the largest BNPL fintech company in India with 24 million pre-approved BNPL users.
• According to Redseer, digital BNPL players’ GMV could scale up 15 times to $45-50 billion in the next four years.

‘Buy Now, Pay Later’ (BNPL) has become the new buzzword in the Indian fintech ecosystem that everyone has been chasing. From Paytm to Ola Money, everyone has been looking to get deeper into the fintech space and generate revenue out of this simple form of micro loans.

However, Upasana Taku of Mobikwik believes that it's not as easy as a few companies are making it out to be. Mobikwik – which has been in the BNPL space since the last two years – noted that there is a lot that goes behind the scenes in order to build these BNPL processes.

“Lending as a feature the whole world is making. Don’t worry, mein bhi yahin hoon, aap bhi yahin hoon. 2024 mein baat karein gaye, vo sab band ho gaya hoga... Log na excitement mein aa kar posuting, prespetion aur valuation k liye cheezein shuru kar dete hain phir usmeine grand opening and grand closing ho jati hai [We are here, we’ll talk in 2024, till then all these new businesses will be shut. People get excited and start new vertices for posturing, perception and valuation. Then there is a grand opening and a grand closing],” Taku said.

She also gave examples of how Flipkart, Ola, Amazon and several other non-traditional players entered the wallet payments in 2015 as it became a fad, but later exited since they had no expertise in the domain. Even MakeMyTrip has a wallet, but it is now only used for cashbacks, she added.

“Kuch cheezein fashion mein aati hain, jitni jaldi aati hai utni jaldi fashion se nikal bhi jaati hai… Ultimately kya hota hai ki yeh sab khulta hai, ek-do saal paise bhetein hain. Phir 1-2 saal mein yeh sab baand bhi ho jata hai kyunki sabko realize hota hai ki hum apne core business mein leadership position to manage nahi kar paa rahe hain. Hum ek aur side business mein bina focus ke kya karna cha rahe hai. [These are just fads that come and go. Ultimately, the companies flow a lot of cash in these fads for 1-2 years and then shut it down as they realise that they are not able to manage leadership positions in their core business and it makes no sense for them to enter a new vertical without focus,” she added.

Taku has zeroed down on three major problems that any new fintech company planning to get into consumer-facing BNPL products might face. First, where to get the customer. Second, where to get the data from. Third, who to partner with so that the customers can spend the credited amount.

How to get consumers?

“You need consumers, and consumer ko acquire karne ke liye customer acquisition cost lagti hai [to acquire consumers you need to spend on customer acquisition cost], which if you're acquiring from a Google or a Facebook or a partner, it is going to be ₹1000 or higher per person. That’s a massive problem for any new fintech that is starting, because it will cost them a lot of money to acquire new customers,” she added.

Where to get the data?

Citing this as a “chicken and egg” problem, Taku explained that the Credit Information Bureau (India) Limited (CIBIL) only has data of the top 50-60 million people in India. These are the type of users that top banks and credit card companies have been chasing for loans.

A BNPL product usually focuses on users, who usually don’t have any credit history or data on them, but are transacting digitally. These platforms don’t just need this data to know who to lend to, but also to know how much to lend.

Another issue for new BNPL companies is that if they acquire 1000 customers, only a part of it would be creditworthy. However, since the companies have spent so much capital on acquiring these users, they can’t really reduce the ticket size of these BNPL credits. “Now most fintechs are giving ₹10,000, ₹30,000, ₹40,000 on a three months EMI [equated monthly installment] kind of product. But that is when they are able to make money on it. They can’t reduce the ticket size because it is a problem that they spent so much on acquising the total users,” Taku noted.

Where will customers spend this credit?

The third and another major challenge is setting up a BNPL business is getting merchants to use the payment feature so that the customers have enough options to spend the credited amount. Several companies like Zomato, Swiggy, Amazon and Flipkart currently accept BNPL whether directly or through third party platforms like Simpl, LazyPay, ZestPay and others.

There is not much sense to borrowing capital from fintech startups if you are not able to spend it.

“As an example, there is a company called Simpl. They also have a buy now pay later product. They are not into the payments business. So they don’t have millions of merchants unlike us. Therefore, their PayLater product is available in a few hundred ecommerce platforms or apps. That is a problem,” Taku added.

“In a platform play [it is easier], because you already have millions of merchants, you already have millions of customers,” Taku explained. The company claims to be the largest BNPL fintech company in India with 24 million pre-approved BNPL users.

“This is where a platform like Mobikwik has a serious upper hand,” Taku added, explaining that 50 million users have completed ‘know-your-customer’ (KYC) with Mobikwik so they have all customers' details. Secondly, they also have the customers’ spending and financial data given they have used Mobikwik’s app across their products.

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