MobiKwik shelves BNPL play amid margin pressure and lender scarcity
Instead of doubling down on short-tenure loans, MobiKwik is repositioning its lending portfolio toward EMI-based longer-term credit and secured products.
Digital payments company MobiKwik is quietly pulling the plug on its once-popular BNPL (buy now pay later) offering, Zip, as tighter regulations and shaky economics force the startup to pivot toward longer-term, secured lending.
Speaking during the company’s Q4 FY25 earnings call, MobiKwik’s Head of Finance, Corporate Development & IR Komal Sharan confirmed the move, stating the company has already begun winding down the small-ticket, short-tenure BNPL loans.
“The shorter duration product is something that we are discontinuing,” she said, referring to Zip. “The real number to see is the Zip EMI GMV, and that number actually has continued to grow.”
MobiKwik’s Zip product, its small-ticket, short-term credit line that the company seeks to discontinue, saw a sharp drop in usage during the March quarter. Its digital credit GMV fell by half, from Rs 306.8 crore in Q3 to Rs 153.7 crore in Q4 FY25.
In contrast, Zip EMI, the company’s longer-tenure credit offering, which the company plans to renew its focus on, grew from Rs 397.9 crore to Rs 527.2 crore over the same period.
Yet, on a full-year basis, Zip clocked Rs 2,880.9 crore in digital credit GMV, contributing more than half of the company’s total digital credit throughput. Last year, Zip GMV stood at Rs 6070.2 crore.
Meanwhile, Zip EMI—the longer-tenure product—generated Rs 2,477.4 crore in FY25, slipping from Rs 3,023.2 crore in the previous year.
MobiKwik’s financial services segment suffered as a result. Revenue declined from Rs 55.79 crore in FY24 to Rs 40.28 crore in FY25, reflecting a 41% drop in ZIP disbursals—from Rs 9,093.4 crore in FY24 to Rs 5,358.3 crore in FY25.
Mobikwik saw its losses widen to Rs 56.03 crore in Q4 FY25 compared to a marginal loss of Rs 67 lakh a year earlier, as the growth in its payments business failed to offset mounting expenses and a slowdown in its credit distribution segment. According to filings, revenue from operations in the quarter stood at Rs 267.78 crore, up only 1.1% from Rs 264.98 crore in Q4 FY24.
Shifts to sustainable credit models
Instead of doubling down on short-term loans, MobiKwik is repositioning its lending portfolio toward EMI-based longer-term credit and secured products. The company highlighted Zip EMI as a growing segment and pointed to the launch of its Rupay Credit Card as a replacement for the BNPL product.
“The Rupay Credit Card, like we’ve been saying in the past, is a replacement of the shorter-duration product,” said MobiKwik CFO Upasna Taku, adding that it offers “a good 30-day credit product, while also creating a funnel for the overall longer-duration product.”
MobiKwik is also piloting new secured lending offerings, such as loans against mutual funds, and ramping up risk-free distribution channels in partnership with NBFCs and banks.
“We are also enhancing two things: one is the product suite… and secondly, also increasing the products that we offer,” Taku said.
Margins in focus
The exit from BNPL comes as MobiKwik faces pressure to restore profitability. While the company reported a consolidated contribution margin of 30%, the lending vertical dragged performance in the past two quarters due to high upfront provisioning mandated by DLG contracts and weak disbursals. However, leadership is confident of a turnaround.
“There has been a triple whammy… disbursal is lower, cost is higher due to DLG, and revenue is back-ended,” Taku said.
MobiKwik’s lending-related expenses increased sharply from Rs 17.81 crore in FY23 to Rs 30.29 crore in FY24, before dropping to Rs 21.47 crore in FY25 as the company cut back on loan disbursals. However, when seen as a share of total loans given, these costs still rose—from 3.5% in FY23 to 4.0% in FY25—showing that lending has become more expensive despite the lower volumes.
Still, the company expects an inflection point ahead. Lending margins, which once delivered a 40% contribution, are expected to normalise as disbursements grow and more of the loan book transitions to the DLG model.
“Once lending stabilises and steps up in terms of disbursement, we do feel that it will come back to the overall gross margin, which was 40%,” Taku said.