MobiKwik acquires ClearFunds

Digital payments company MobiKwik has acquired online mutual fund platform ClearFunds as it pivots towards a complete fin-tech company facing tough competition from market leader Paytm, owned by One97 Communications Ltd.

Founded in 2016, Clearfunds (Harvest Fintech Private Limited) is an online mutual fund advisory platform that claims to use data science and analysis to help investors make informed and profitable investment decisions. It claims to have $45 million in assets under management (AUM).

MobiKwik, which has a customer base of 100 million, will now sell only direct plans on its platform that comes without distributor commissions. Paytm Money, the new wealth management unit of One97 Communications Ltd, entered the mutual fund market with its own application in April this year.

The Gurugram-headquartered company will invest $15 million in its wealth management category in the next year to take on competitors like Paytm, which in turn is reportedly looking to offer shares of listed companies directly to customers. MobiKwik recently entered digital lending services by offering 90-second loans to its users in a bid to compete with Soft-bank backed Paytm.

Flipkart acquires FX Mart

India’s largest e-commerce firm Flipkart has bought payment services start-up FX Mart Pvt. Ltd, which holds a prepaid wallet license, so as to add a payment service on its platform and on that of its unit Myntra. Singapore registered Flipkart Payments Pvt. Ltd, paid Rs. 45.4 crore for a majority stake in FX Mart and two senior Flipkart executives also joined the board of FX Mart.

FX Mart owns a coveted prepaid license issued by Reserve Bank of India. The license will allow Flipkart to offer a digital wallet on its app and avoid paying a cut to external wallet providers. The license can also potentially help Flipkart increase the proportion of cashless transactions. A majority of shoppers still prefer paying cash for online purchases, which creates operational headaches for e-commerce companies.

With FX Mart License, Flipkart which has been a laggard in payments plans to launch a payment service on its app as well as Myntra within the next three months. The company also plans to offer the payment service on third party sites and apps later. The current market leader is Paytm followed by a host of smaller firms such as Oxigen Services India Pvt. Ltd and One MobiKwik Systems Pvt. Ltd.

India has several others payment services start-ups including Citrus Payments Solutions Pvt. Ltd, PayU Payments Pvt. Ltd, CCAvenue and Zaakpay. FX Mart offers electronic payments, foreign exchange and travel services. FX Mart is Flipkart second acquisition in digital payments. It bought another payments start-up NGPay last year.

Mobile Wallet

Mobile wallet is a virtual money wallet that can be used to make instant payments. Domestic e-commerce companies, such as Flipkart, plan to launch a wallet soon, while a few payment gateways, such as Paytm and Mobikwik, offer semi-closed wallets already. Telecom operators also offer this facility internationally. Apple Inc. also introduced an iPhone Wallet, which will have tie-ups with Visa Inc., Master Card Inc., and American Express Co.

Mobile wallet is going to next wave of change in the way people make payments. Let us see more about what is Mobile Wallet and how is it going to work? It is a virtual money wallet that can be used to make instant payments same as with a physical wallet. It is an application stored in cell phones, which enable users to make payments for utility bills, book tickets, transfer money, other such transactions. It can also be used to make e-payments while shopping, in physical stores or at e-stores.

Once an application is stored in the phone, a user is registered and knows your customer documents are submitted, a user can transfer money to this wallet and then make payments. Customer can provide any of his documents such as driving license, passport, voter identity card, Aadhaar card, and PAN card for identity and address proof. Bank account statement can also be given for address proof. The outlets where payments can be made depends on the wallet- closed or semi-closed. Closed wallets generally allow payments only at particular merchants, while semi-closed wallets allow payments to a group of establishments that have agreed to accept payments through the wallets.

It is more convenient to use it than a web based payment method such as paying through a website. The payment can be made over a mobile network as well as through a message using the unstructured supplementary service data platform. Users can make payments without using cash, debit cards, and credit cards, while in a store. This protects users from card data being misused through phishing and cloning. Since the application requires a Mobile personal Identification Number (MPIN) to make transactions, even if the mobile is stolen or lost, without the MPIN, a transaction will not be possible.

Daily and monthly limits to the number of transactions are the big hurdle while making big purchases. It cannot be used at all outlets is also a worry. Mobile wallet will have money stored in it, it will not earn any interest, while money in a bank savings account earns 4-7% interest, depending on the bank.