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MobiKwik wants to take on Pine Labs to dominate the latter’s stomping ground—merchant payments. During the Q4 FY26 earnings call, its co-founder and Chief Financial Officer (CFO), Upasana Taku, said the company will deliberately reroute profits generated by its core consumer payments and lending business to build new growth engines, including offline and online merchant payments.
The fintech company, which went public in December 2024, generated an EBITDA of Rs 50 crore from its payments and financial services business in FY26. It currently serves 4.9 million merchant partners, online and offline channels combined.
1. Why scaling merchant payments makes sense for MobiKwik: Unlike consumer payments, which run on zero-MDR rails, merchant payments–both offline and online–operate on MDR, device, and settlement economics with significantly lower competition, Taku said.
“When it comes to merchant payments, UPI transactions don’t generate MDR. It is the credit on UPI rails, the RuPay credit card transactions that generate the MDR. And then there is a device rental. And then after there is a strong merchant engagement. Then one can build the merchant credit pipe also,” she told analysts during the post-earnings call.
When asked about the company’s strategy on the merchant acquisition, Bipin Preet Singh, co-founder and Chief Executive Officer (CEO) of MobiKwik, said the company has identified specific categories within the merchant payments space where it aims to capture a meaningful market share.
In the offline space, it has identified three categories: small mom-and-pop stores, oil and gas outlets and organised retail. MobiKwik aims to capture a 10-20% market share, or at least 10-20% share of the market leader’s position in this space, over the next 18-24 months. Over the next two years, the company plans to deploy 5x more soundboxes and electronic data capture (EDC) machines to monetise offline merchant payments, targeting 10x revenue growth by FY28.
Then there is the online merchant payments space, where it aims to tap education and government organisations and acquire merchants via UPI, debit cards, and credit cards through Zaakpay, its payment aggregator arm.
2. The challenge: Scaling an offline point of sale (PoS) ecosystem can be challenging, as it is a more execution-heavy business. It typically requires on-ground merchant acquisition, device deployment, service infrastructure, and continuous filed support. This makes the model more cost-intensive than online payments.
However, given the increasing focus on tap and pay and QR payments, does it make sense for companies to build large PoS networks amid rising competitive intensity?
Currently, Pine Labs dominates the offline PoS business with base of around 1.9 million devices, followed by Paytm at around 1 million and Razorpay at about 0.5 million.
3. MobiKwik’s NBFC play: Last month, the Reserve Bank of India (RBI) approved MobiKwik’s application for non-banking financial company licence. That unlocked a new revenue stream for the company.
“The NBFC approval will unlock better unit economics, both on our own books as well as in co-lending, where we’ll be able to partner with more banks and NBFCs. We’ll get better terms in First Loss Default Guarantee (FDLG) and have access to wider pool of public sector and private banks,” Taku told analysts during the post-earnings call.
Beyond unit economics, the NBFC will also enable greater product velocity for MobiKwik. Under the current lending service provider (LSP) model, every product decision goes through lender approval cycles. The company onboards customers via its app, completes KYC, collects data, and provides underwriting support. This way the lender can reduce risk. However, everything has to be done under the approval of its partner bank or NBFC.
As an NBFC itself, MobiKwik can build credit products on its own timeline. It can decide which customers are eligible for loans, as well as the size of the disbursals.
MobiKwik expects to transition from its LSP model to an NBFC model in the next 2-3 months, and begin operations and disbursals under the co-lending model in the next 6-9 months. The fintech firm also plans to secure board approval to infuse additional capital into its NBFC entity in the coming months.
Over the past few months, the share of loans to repeat customers has increased from about 20% to 63%, with a focus on Prime and Super Prime users. This has resulted in higher net margins, the management claimed.
While MobiKwik is betting heavily on its NBFC unit, its listed rival Paytm’s CFO, Madhur Deora, said in a recent earnings call that the company is “not excited” about applying for an NBFC licence, days after the RBI dropped the regulatory hammer on its payments bank unit.
4. Positing itself as a AI-first company: The fourth growth engine for MobiKwik is AI. According to the management, the company aims to become an AI-first company by FY28.
In an investor presentation, the company said that it aims to embed AI across all its business lines, enabling sharper underwriting, better collections, and faster customer and merchant onboarding. AI is already emerging as a competitive moat for MobiKwik.
“80% of the platform’s code is AI-generated, 55 % of early collections are AI-driven, and 86% of customer support is self-served by AI. And we are going further. AI will own the full lending lifecycle. It will identify funnel drops, drive user personalization at scale, and acquire better cohorts and lower spend. And it will also help us detect frauds in real-time,” the MobiKwik CFO said.
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