Whalesbook
### Profitability Returns to MobiKwik
MobiKwik has re-entered a profitable phase, signaling a recovery after periods of net losses. The company announced a 5% EBITDA margin and a 1.5% Profit After Tax (PAT) margin for the most recent quarter. This turnaround is attributed to gains in operating leverage and a sharp focus on business expansion, according to Chief Financial Officer and Co-Founder Upasana Taku. While past quarters saw a dip due to disruptions in consumer credit, recent performance indicates a return to positive EBITDA, with Q2 FY26 recording only a ₹6 crore negative EBITDA. The management anticipates sustained profitability, though margins may fluctuate with business cycles.
### Aggressive Market Share Pursuit
The digital payments firm is charting an ambitious course to enhance its market standing across key segments. MobiKwik, already a dominant force in the digital wallet space with an 18-20% market share, is now targeting a top 10 position among UPI payment applications, up from its current 12th rank. It also aims to ascend in the bill payments sector, where it ranks seventh by consumer usage. This multi-faceted growth strategy is designed to capitalize on cross-selling opportunities, extending its reach into financial services and other payment verticals. The overall payments GMV has seen 12 consecutive quarters of growth.
### The Case for UPI Merchant Fees
Upasana Taku has publicly advocated for the introduction of Merchant Discount Rate (MDR) charges on person-to-merchant UPI transactions, particularly for high-volume merchants. She argues that businesses processing over ₹1 crore monthly, or those paying fees for credit card and net banking transactions, should also contribute to the cost of UPI services. The current model, where payment companies and banks bear the significant operational and developmental costs of maintaining the UPI infrastructure without direct merchant revenue, is deemed unsustainable. Taku suggested implementing MDR for merchants with monthly revenues exceeding ₹40 lakh to ₹1 crore, or for transactions above ₹2,000 to ₹5,000, while keeping smaller transactions fee-free.
### Loan Disbursement Momentum
Beyond core payment services, MobiKwik's financial services arm is demonstrating strong expansion in personal loan disbursements. Following the phasing out of its Buy Now Pay Later (BNPL) product, personal loan disbursals surged to ₹900 crore in Q3 FY26, a significant increase from ₹400 crore in the same quarter of the previous fiscal year. The company projects double-digit annual growth in this segment, supported by a network of four large Non-Banking Financial Companies (NBFCs) and six smaller lenders for personal loans and secured credit products.
The Competitive and Regulatory Gauntlet
MobiKwik operates within India's highly competitive digital payments market, dominated by giants like PhonePe and Google Pay, which command substantial market shares in UPI transactions. While MobiKwik leads in wallets, its 12th position in UPI indicates a challenge to gain traction against established players. The proposed introduction of MDR on UPI, though framed as essential for sustainability by companies like MobiKwik, faces a complex regulatory environment. The Reserve Bank of India (RBI) has been assessing the feasibility of UPI MDR, aiming to balance the need for infrastructure viability with the mandate of UPI as a public good. Any implementation could shift competitive dynamics, potentially impacting smaller players who lack the scale of larger competitors. Furthermore, the broader fintech sector in India is under increasing regulatory scrutiny, particularly in lending, demanding robust compliance and risk management frameworks.
Forward Outlook and Sustainability
MobiKwik's dual strategy of aggressive market share growth and revenue diversification through lending is positioned to drive future performance. The company's stated focus on operating leverage suggests a path towards consistent profitability, contingent on continued business scaling. However, the debate over UPI merchant fees remains a critical factor, potentially unlocking a new revenue stream or creating friction with merchants and regulators. sustained growth will likely depend on its ability to navigate the fiercely competitive landscape and adapt to evolving regulatory requirements in India's dynamic digital payments ecosystem.