India: ‘40 million merchants are yet to go online, that’s an opportunity’

Interview of Bipin Preet Singh, founder & CEO of MobiKwik, which has a current network of 3 million direct merchants in India:

Where do you spot the next opportunity? Offline retail. Retail is a $2 trillion opportunity and e-commerce is less than 1-2% of retail. We need to reach out to the offline merchants, irrespective of their size, and apprise them about the digital opportunity. India has close to 40 million merchants. They will be the biggest assets we create. The POS machines have been driving financial transactions in India, but they have a high customer acquisition cost and the penetration is lower. Also, POS machines need good internet bandwidth which is still a challenge in the interiors of India. QR codes will be a powerful tool to drive the digital economy. The merchant acquisition cost in this case is much lower (average of only Rs 100) and QR code-based transactions can run on lower internet bandwidths. India will leapfrog from a card-based economy to a smartphone-based QR-code economy.

We are working on launching an array of financial services offerings. This is in line with our vision to enable a billion Indians access to digital payments, loans, investments and insurance with one tap by 2022. Lending is a huge opportunity as only 10% of Indians have access to credit. We will roll out a lending product designed to offer instant credit to customers. Credit assessment is difficult, especially in case of new borrowers with no credit history. So we’ve developed our own alternate lending model, Mobiscore, based on 400 variables, for credit assessment. Both small-ticket and large loans will be offered via the MobiKwik app. Lending is a high margin product and we are confident it will drive the next level of growth for MobiKwik, including driving more payments.

How difficult or easy is it to convince vendors to go cashless since modern retail hasn’t flourished here? This is more to do with a mindset change as in the case of business mobility many years back. No one believed smartphones could exist and be used for emails/instant messaging and a plethora of other applications, beyond phone calls and messages. Likewise, in the case of digital payments, there is a need to educate vendors about the benefits. The vendors have been doing business in cash for a long time. They need to be confident that digital transactions will enable them to run their business more efficiently.

Source: John Sarkar, The Times of India (New Delhi edition), May 13, 2018, p. 18

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