Net1 invests in VC-backed Indian mobile wallet start-up
Net1, a NASDAQ-listed payment services provider with a presence in South Africa and Korea, has committed $40 million to Mobikwik, an Indian mobile wallet start-up that has received several rounds of VC funding.
The investment will be made over a two-year period, and as part of the agreement, Net1's payments technology will be integrated across all Mobikwik wallets. Serge Belamant, chairman and CEO of Net1, said in a statement that the arrangement "will accelerate our ability to build scale in India."
Founded in 2009, Mobikwik partners with retailers to provide digital payment services for use both online and offline. Customers deposit money into an online account and use that to make payments to merchants, rather than enter bank details for every transaction. In addition to bill payments and money transfers, the wallet can be used to top up mobile phone credit, book tickets and access special offers. Major competitors include Alibaba Group-backed Paytm.
Mobikwik claims a network comprising 32 million users and 100,000 retailers and is looking to reach 150 million uses and 500,000 merchants over the next three years.
Net1 cited a July 2016 study by Google and Boston Consulting Group that estimated India's digital payments industry will be worth $500 billion by 2020, a tenfold increase on current levels. Over half of the country's internet users are expected to use digital payments by 2020, and the top 100 million users are expected to drive 70% of transaction value. In addition, the value remittances and money transfers passing through alternative digital payment instruments is projected to double to 30%.
Existing investors in MobiKwik include Sequoia Capital, Tree Line Asia, American Express, Cisco Investments, GMO and MediaTek. Earlier this year, GMO Global Payment Fund - which is run by GMO's payment processing platform GMP Payment Gateway - led a $50 million Series C round for the company alongside Taiwan-based semiconductor manufacturer MediaTek. It was unclear whether this represented the entire round, with reports that the overall target was $80-100 million.
Net1's primary technology is the Universal Electronic Payment System, which facilitates biometrically secure, real-time electronic transaction processing to unbanked and under-banked populations of developing economies. It has also developed MVC, which offers secure mobile-based payments as well as mobile banking and prepaid value-added services.
In addition, the company offers debit, credit and prepaid processing and issuing services for Visa, MasterCard and ChinaUnionPay in Asia, Europe, Africa and the US through Transact24, and providers payment processing and working capital financing services in Europe under Masterpayment.
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