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Exclusive: Instamojo is looking at international expansion in SE Asia, Middle East

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 in an interview. “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,” he said.

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. 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, Gehani added.

MediaNama: How has the company adapted to the pandemic?

 Akash Gehani: 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. We are now processing 25-30% more transactions, on a monthly basis,compared to the pre-COVID period.

MediaNama: Merchant acquisition had to be stalled for a while. Have your costs risen?

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 Akash Gehani: 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

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.

MediaNama: Which digital payment channels are the majority of consumers are using post the pandemic?

 Akash Gehani: 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.

In the higher value segment, credit cards are more prevalent, while UPI has taken the market share in the lower-value segment. 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. These changes in terms of consumer spending methods have not affect the mix of our revenues.

MediaNama: How has the lending business fared in the last 9 months?

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 Akash Gehani:We have disbursed more than ₹250 crore in total through the sachet loan product while ‘InstaCash’ is yet to take off significantly. 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. On a monthly basis, around 8,000 to 10,000 merchants avail loans through Instamojo.

MediaNama: Do you plan to scale into a full-stack fintech?

 Akash Gehani: 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.

MediaNama: How has the logistics service performed?

 Akash Gehani: At present, we have reached the pre-COVID levels in terms of shipping 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.

MediaNama: Did the pandemic change your financial plans?

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 Akash Gehani 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. W turned cash-flow positive in the last few months.

**
(Updated March 13, 2021 7:10 pm). Updated based on Editorial Direction. Originally Published on November 18, 2020.

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Reports on banking, payments, fintech and crypto-curencies. Additional reporting on media regulations, data protection and other areas.

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