What MobiKwik’s IPO filing says about the ‘pay later’ business

MobiKwik’s ‘buy now, pay later’ business accounts for just one-fifth of its revenue. Yet, in the draft prospectus for its Rs 1,900 crore ($260 million) public share listing, the digital payments startup pitches this buzzy lending product as a cornerstone of its growth.

BNPL redefines the traditional financing business of repayments via equated monthly instalments, or EMIs, typically reserved for credit card holders. It allows shoppers to make multiple purchases on the go and pay interest-free in one shot after a period of time.

This doesn’t make for a high revenue-generating model but BNPL has proven to be a customer magnet, evident by its robust output for MobiKwik during the pandemic’s second wave. 

‘Buy now, pay later’ is a hot but fledgling category in India, with several fintech and payments startups including LazyPay (now a part of PayU India), Zest Money, Pine Labs and Paytm leaning on it to boost their lending businesses.

The CapTable analyses MobiKwik’s draft red herring prospectus, which offers some important perspectives on the BNPL category and how it’s likely to shape up in the domestic market.