Instamojo plans to take its payments and commerce solutions products to international markets in the coming months, in particular to emerging markets neighbouring India including Southeast Asia and the Middle-East, the company’s CEO and co-founder Akash Gehani told MediaNama.

Recently, Instamojo raised an undisclosed amount through a pre-series-C round from a clutch of Japanese investors, which Gehani says will help the company focus on building its product stack, increasing its user base, growing the team, in addition to expanding to emerging markets. “A part of the capital will be kept aside for the international expansion to emerging markets and over the coming few months we will finalise the plans,” he said

“Similar to how demonetisation pushed people into using digital payments, the COVID-19 pandemic has accelerated the need for businesses to build an online presence. For this year and the coming year, our focus is to build these tools for merchants and helping them come online, and in the beginning of this year we acquired GetMeAShop which was a very important piece for this play.” — Akash Gehani, CEO and co-founder of Instamojo

Impact of COVID-19 felt in three phases

Gehani broke the last eight to nine months of the pandemic into three phases. “In Phase 1, between March and April, transactions on the platform were impacted drastically, falling by 50%. From April to July [Phase 2], things bounced back and we saw transactions growing month on month by 30-40% and by the end of July we got back to the pre-COVID levels. And in Phase 3, business has continued to grow and now it has stabilised higher than the pre-COVID levels,” he said. “We are now processing 25-30% more transactions, on a monthly basis,compared to the pre-COVID period,” Gehani added.

Merchant acquisition required no marketing

On merchant acquisition, Gehani said that the company actually benefited and its acquisition got stronger compared to other aspects of the business. “A lot of businesses realised that they have to go online, and in the beginning of this year we stopped spending money on marketing. But this had no effect on acquisition as it kept growing. So today we have reached a stable level, we are now adding 1,500 merchants a day today compared to around 1,000 in the pre-COVID period. We now have over 1.3 million merchants on the platform,” he said.

Gehani added that the mix of merchants they are acquiring has changed in the last few months with more businesses in the food and retail, education and individual services’ sector coming on board, while acquisition in sectors like travel crashed through there is a slight rebound in the last month or two, he said.

‘Wallets have disappeared, UPI forms the majority of transactions’

The pandemic has induced more customers to use digital payments leading to the Unified Payments Interface (UPI) processing more than 2 billion transactions worth ₹3.86 lakh crore in October this year. “UPI numbers have been growing on a monthly basis and that is because more customers are using it either online or offline. The share UPI payments on our platforms was around 15-16% a year back and now it accounts for the majority of small-ticket transactions. Although, I do believe it [volume of UPI transactions] will plateau at some point in the near term because it has been growing so fast and since most higher-ticket transactions take place on credit cards,” he said.

In the higher value segment, credit cards are more prevalent, while UPI has taken the market share in the lower-value segment, he said. “Wallets have just more or less disappeared even though it was never big chunk of the mix. Net-banking has fallen a bit, while debit cards have kind of held onto their share. We are launching UPI Autopay for our clients to facilitate recurring payments soon as well,” Gehani said. Since the company charges a flat fee on the payments side as well on its online store solution, these changes in terms of consumer spending do not affect the mix of its revenues, he added.

Sachet loan product is growing 100% annually

Instamojo began disbursing sachet loans, which are small loans based on the merchant’s sales through the platform, to its merchants nearly two years ago back in August 2018, under mojocapital. The company recently launched InstaCash, a short-term loan product through which merchants could avail loans up to ₹1 lakh. The company has disbursed more than ₹250 crore in total through the sachet loan product while ‘InstaCash’ is yet to take off significantly, Gehani said. “On the sachet loan product, we have grown 100% on year-on-year basis and now we are doing ₹15-20 crore a month compared to ₹10 crore last year. It is still early for InstaCash since we launched it to a limited set of our customers and are still working on fixing the product market fit, even though there is a quite a bit of demand,” he said. On a monthly basis, around 8,000 to 10,000 merchants avail loans through Instamojo, Gehani added.

Logistics service impacted significantly

The company launched ‘mojoexpress’, a logistics service, in September 2018 which gained traction among its clients and the company was doing around 1,000 shipments on a daily basis but because of government restrictions in the wake of the pandemic this service was significantly impacted, Gehani said. At present, the company has reached the pre-COVID levels in terms of shipping but “because this has a lot to do with the macro-economic scenario and many businesses are yet to recover completely, it is yet to take off compared to other parts of the business,” he said.

Financial targets had to be revised because of the lockdown

“We made our plans for FY21 but everything went for a toss once the lockdown happened. We have been revisiting our targets every quarter and now we are seeing some stability as businesses have recovered. We should be doubling our business this fiscal year, and for the year after that we are planning the international expansion and adding new products,” Gehani said. He added that the company has turned cash-flow positive in the last few months.

In FY19, Instamojo Technologies Pvt Ltd made ₹29.5 crore in revenue, up by 80% YoY, from ₹16.35 crore in the previous year. The company had a net loss of ₹8.52 crore in FY19 compared to a net loss of ₹11.6 lakh in the previous year, according to regulatory filings with the Ministry of Corporate Affairs. Regulatory filings for FY20 were not available.

Instamojo Technologies is a wholly owned subsidiary company of Instamojo Inc, which is headquartered at California.

‘Our focus is on commercial solutions’

Unlike some of the prominent payment companies that provide consumer-facing apps, Instamojo’s clientele is merchants, and small and medium businesses. While some of the company’s competitors, like Razorpay or Infibeam Avenues, have entered the neo-banking space and deepened their financial services product stack, Gehani said that Instamojo is more focused on commercial solutions as opposed to financial solutions. “We do not define ourselves as software company or payments company. Today, we feel that the majority of Indian businesses need to adopt technology and get online to grow their business, which is what we will work on. We will look at banking products if there is a need for it, but that is not how we define ourselves as our focus is on the commerce front,” he said.