The rise of e-commerce in India has triggered a wave of startups that are leveraging the increasing adoption of smartphones to provide mobile payment solutions. Alibaba invested in Paytm at an apparent billion dollar valuation earlier this year, and now MobiKwik is the latest to be flushed with new cash.
New Delhi-based MobiKwik has pulled $25 million in funding, led by Singapore-based hedge fund Tree Line Asia. The deal included participation from a couple of interesting strategic investors — Cisco and American Express.
Existing investor Sequoia Capital was also in the heavy-hitting Series B round. MobiKwik raised a $5 million Series A in 2013, and it is targeting a $100 million Series C which it aims to complete in the second half of this year.
Rival Paytm claims 25 million registered users, but its service covers e-commerce as well as a payments wallet and mobile recharge services. MobiKwik currently claims “over 15 million” registered users for its payment wallet, but it is ambitiously shooting to raise that figure to 100 million by the end of next year.
With credit card penetration in India low — not to mention the rate of bank account usage also small — mobile wallets are emerging as a way to handle payments with more complexity than cash-on-delivery and a more engaging model than bank accounts, which can be challenging for those in rural locations.
MobiKwik is betting that a network of physical retail points will help push its digital service to more people. It claimed to have a national network of more than 100,000 merchants, through whom customers can load money into their wallet and also make payment in person. That’s important because, as we seem to point out every day, although India’s smartphone adoption is growing, it is still nascent. That makes offline an important component for any digital service.
Beyond helping on the payment side, MobiKwik said it has (followed Paytm) and applied for a payment banking permit. It plans to “disrupt the delivery of financial services in India by using mobile technology to reach people that the existing banking networks have been unable to reach.”
As I wrote back when Paytm added support for payments to bank accounts, online payment services are increasingly overlapping with services offered by traditional banks and telecom operators’ mobile banking initiatives. It will be interesting to see what MobiKwik has planned.
In particular, adding reputed industry players Cisco and American Express will not harm its chances of moving beyond merely facilitating payments.
“We are delighted to have American Express and Cisco on board. We intend to leverage their strong understanding of financial transactions, user behavior and bleeding edge technology to make MobiKwik the most trusted way to pay in India,” MobiKwik founder and CEO Bipin Preet Singh said in a statement.