One MobiKwik Systems Limited (MOBIKWIK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '25 Earnings Conference Call for MobiKwik hosted by Investec Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Neel Mehta from Investec Capital. Thank you, and over to you, sir.

Yes. Thank you, Sagar. Good evening, everyone, and welcome to the maiden earnings call of MobiKwik. We have with us Mr. Bipin Preet Singh, the Managing Director and CEO; Ms. Upasana Taku, the Co-Founder and CFO; and Mr. Anand Kumar, the Head of Corporate Development and Investor Relations, joining us today. Without further ado, I'll hand over the call to the management team for their opening remarks, post which we can open the floor for the Q&A. Thank you, and over to the team.

Great. Thank you, Neel. Good evening, everyone. This is Upasana Taku, Co-Founder and CFO of MobiKwik. It's great to be doing our first earnings call today. As you all know, we had to work extremely hard last year and for the last few years to accomplish our IPO. In fact, I'm very related that in 2024, the only fintech to get listed in India was MobiKwik. Now with the successful listing on 18 December '24 behind us, we are all excited about the future. I can tell you one thing, Bipin and I are equally kicked about the India fintech opportunity today as we were in August 2009 when MobiKwik was started. I'll take a few minutes to describe a few things about MobiKwik, and then we will definitely answer all of your questions. The first thing I want to talk about is how we work, what we call our DNA. I would like to highlight that without raising any equity, MobiKwik went from INR 300 crores revenue and negative INR 100 crores EBITDA in FY '21 to about INR 900 crores in revenue and INR 37 crores in EBITDA in FY '24. That is a 3x revenue growth and a full year of profitability in FY '24. This is what we call our DNA, which is chasing profit and growth via frugal innovation. Now the IPO has given the company access to INR 572 crores in capital only at the end of 2024. This is definitely the first large equity raise for the company in the last 3.5 years. We have just started thinking about how to allocate this money in a prudent and smart manner so that we can double down on the existing lines of business while also investing in new business lines that will create upside for the future. One thing I can assure you is MobiKwik will continue to execute in the same heads down frugal manner as we have been with the same DNA of chasing profits and growth with an extremely high bar for governance. To say a few things on the platform side, I'm pleased to inform you today, MobiKwik, based on publicly available data is the largest wallet player in India, is the fifth largest player on the Bharat Bill Payment, BBPS system and 16th player in terms of the UPI. All these numbers are based on GMV. In terms of the scale of the platform, we are today with 172 million users and just shy of 5 million merchants. We are adding healthily 5 million users every quarter, approximately 20 million every year. On the merchant side, we are adding about 1 lakh to 1.5 lakh merchants every quarter. And all of this we are doing at industry low cap. Of course, we know that we are very small on the merchant side, but we are focused on scaling this up because on a long-term basis, we see a huge amount of value in building our own merchant network. On the product side, now this is the most exciting thing. Both Bipin and I are product people. So we love working with our product managers and engineers on building innovative, new products and features for our users and our merchants. You might have heard just recently, we announced that MobiKwik is now the first fintech to do a full-scale production launch of India's CBDC project with the blessings of RBI and in partnership with YES Bank. This is a production launch, which means it's available to all Android users. I would urge you all to download the MobiKwik app and try the e-Rupee CBDC wallet. Further, on the payment side, we are also focused on scaling up on the UPI side of the business. And to that extent, pocket UPI and credit card on UPI are the two chosen products that we are trying to work hard to scale up for growth. Pocket UPI is nothing but PPI on UPI or pay with your wallet on a UPI QR deployed by any bank or any payments company. This is something that we have started working on in 2024 itself and we are seeing strong growth here. Interestingly, CPI on UPI also commands MDR. Similarly, we have a co-branded RuPay credit card that we are currently in beta with on our app and we expect to open it up to the public quite soon. This RuPay credit card will allow us to capitalize on enabling users to use small ticket credit for their spend everywhere on UPI. And also, this is also an MDR generating product. So we are looking at these two products as growth levers. Coming to the distribution of financial products side. Of course, in the lending side of credit distribution, we are focused on balancing our portfolio by adding new products, some secured products, some innovative new products, adding new commercial models, which means not only doing DLG-based contracts, but also doing lead gen-based risk-free contracts and also onboarding new partners. We also have some other early opportunities over here. On the savings side, we have our product Lens.Ai, where we have made substantial investments, and we can see millions of Indians understanding what's happening with their money in their bank statements in terms of the investments that they have made. We are thinking of this product as a way for a digital adviser for the masses of India, which then dovetails in enabling us to help them invest via MobiKwik app into mutual funds, into fixed deposits, into digital gold and several other products that we will add here. Similarly, we also have the insurance distribution license, which we are yet to launch. But in 2025, this calendar year, we expect to launch that also. So savings and insurance distribution are 2 early opportunities, which we intend to grow this year. In terms of the regulatory update, we have 3 RBI licenses, the PPI wallet license, the BBPS, Bharat Bill Payment License and the PAPG license in our wholly owned subsidiary, Zaakpay. And then we have the CA insurance license from IRDAI and RIA license from SEBI. All of our licenses are current with no adverse action reported from any regulator. Now coming to the financial update side. In the 9 months FY '25, we have exceeded the full year FY '24 revenue. So whatever we do in Q4 is now upside. The beauty of our platform business is interestingly, in FY '25, 9 months, 73% of the revenue, that is about INR 555 crores has come from the payments business. And in the full year of financial year '24, it was actually quite opposite, where 70% of the revenue had come from distribution of financial products. The substantial growth in both payments GMV and revenue that we have achieved in the 9 months of FY '25, I'm quite elated that we have achieved this GMV and revenue growth with an industry-leading gross margin of 19%. In the distribution of financial products business, we have done INR 346 crores in terms of 9-month revenue, which is higher than the full year FY '24 FS revenue of INR 317 crores. However, of course, on a quarterly basis, we see that there is a decline. This decline is mostly driven by sectoral headwinds, and we see green shoots, and we expect that disbursals will come back to the same level as FY '24, which will result in stronger margins and bottom line performance in the quarters to come. Finally, in terms of the future outlook, what I can tell you is that fixed costs in Q3 are in check, in line with what they were in Q2. We will continue to further optimize them even as we scale our businesses so that operating leverage will eventually kick in. We will bounce back in the distribution of financial products. We will launch the new insurance and savings businesses I spoke about. And payments, of course, keeps growing at a very nice clip. With that, I would like to end our opening remarks and pass it back to Neel.

[Operator Instructions] Our first question comes from the line of Piran Engineer from CLSA.

Congrats on the listing. My first question really is on your financial services take rate, which has gone up 6% to 10% Q-o-Q. Can you just guide us as to what the drivers of this are? Is it mostly the FLDG agreement? And what is the sort of outlook on this? Am I audible?

Yes, sir, you are audible.

Piran, thank you for the question. In terms of the financial services take rate, it is effectively also slightly in this quarter, a base effect. As you would have seen, the revenues in the financial services are lower compared to last quarter. And therefore, mathematically, the take rate is looking higher. But on a longer-term secular basis, the take rate that we have in this business can be in the 5% to 6% ballpark, which is what we've guided towards in the past as well.

And also, if you see the disbursement, right, from the smaller ticket size and the larger ticket size, the disbursement contribution of a smaller ticket size has gone down as compared to the larger tenure, so better margins, take rate.

Okay. So it's also a mixed thing. And what percentage of our disbursements are also covered by FLDG given by us?

So look, this is the first full quarter impact of the FLDG contract. So I would say roughly -- going forward, the -- pretty much all the contracts are under FLDG now, which is something which the industry is also moving towards. If I look at it as a percentage of my overall portfolio, then roughly a shade under 40% would today be under FLDG. So there will be a period of teasing and period of time in which all contracts will kind of move towards FLDG, but today, that number is lower.

Okay. That's helpful. And then secondly, you mentioned that the MDR on PPI on UPI, ballpark, what would that be? How much would that be?

Yes. So based on what we have seen from notifications from NPCI and industry bodies, it is expected to be somewhere in the range, we don't know where it will land. It is not finalized, but discussions are ongoing. I think it could be anywhere in the range of up to 1%.

Okay. And just lastly, your initial thoughts on the cut in budgetary allocation to UPI incentives from INR 2,000 crores to INR 400 crores, INR 500 crores. How does -- is this a precursor to MDR coming back on UPI? Just some initial thoughts would be useful.

So I think first thing we want to clarify is that currently, we do not receive any UPI incentives or subsidy. And in our FY '24 and FY '25 revenues, there is no contribution, even of INR 1 coming from any UPI incentive or subsidy. So to that extent, we are not necessarily impacted. However, we do expect that whatever are the budgeted annual incentives available, we expect that in the future, we will also start getting our proportion.

I think just to add to what Upasana is saying, in any case of projections, a business plan or business model is really not basing itself on incentives. I think we continue to drive profitable growth irrespective of that and any incentive coming that will be an upside.

No, that's fair. I was just thinking would it be the start of -- or the restart of MDR on UPI after 5 years?

Sorry, I didn't get it. Can you repeat that question?

I mean if the government is not going to -- or is reducing its budgetary allocation, is it a signal that they would restart MDR on UPI going forward?

Yes. So, this is Bipin here. So we can't say for sure with respect to UPI MDR overall. But as you know, today, there is MDR applicable on RuPay credit card, which is currently already active in the system in the UPI. And for the PPI, which is where we lead, it's also something that has already been agreed. I think it's not live yet. It's going to go live hopefully very soon. The industry discussions are at a very, very late stage. And that is what Upasana was telling that discussions are going on, whether it will be 1%, 1.1% or slightly lower. These definitely are part of the UPI ecosystem and generating MDR or will be generating MDR. On the core bank UPI MDR, I think there is no clarity yet in my view.

The next question comes from Raghav, an individual investor.

Just wanted to -- I just came across your disclosure on a waiver agreement, which you had signed with one of your partners. So you had foregone revenue of around INR 24 crores and expenses of around INR 42 crores were reversed. This is for Q2. And for Q3, you had seen a reversal of expense of around INR 24 crores. Could you shed some light -- some more light on the nature of these adjustments? And in case these adjustments were not factored in what your revenue and EBITDA would look like?

Sure. So look, sometime in Q2 of last year, RBI came out with updated guidelines on digital lending, pursuant to which the relationship between MobiKwik as the lending service provider, the end customer and the credit or capital provider changed. And to that extent, the quants of our contracts changed. And therefore, unbilled revenue and also unbilled cost -- accrued cost and unbilled revenue that we had already taken in our books were reversed pursuant to such changes. If you look at the disclosures, I think you can calculate the numbers directly. We have given the revenue reversal also as well as the cost reversal for both the quarters. In this quarter, there is no revenue reversal, only a cost reversal. In the previous quarter, there was a revenue reversal as well.

So we had -- if you see our contribution margin in Q2 also and in this quarter also, so we have given the actual numbers and the adjusted contribution margin in -- for quarters for Q2 last quarter in results and this quarter also, we have given the adjusted contribution margin.

Understood. So is my understanding right that if these adjustments were not factored in your EBITDA would be revised to lower by that much amount, for instance, INR 18 crores in Q2 and INR 24 crores in Q3. Is my understanding correct?

So look, in a way, these are costs that we had accrued for already, right? So if you see on a 9-month basis in one quarter versus the other, we had factored in those costs. But yes, mathematically, if you were to just adjust it in that quarter, then what you're saying is correct.

But if you see the 9-month number, the number that we have shown on the first slide, that will not be impacted. So the INR 33 crores number that we have shown EBITDA for the 9 months will remain same.

Okay. And you had mentioned about sectoral headwinds in your ZIP and ZIP EMI products and you also have these FLDG arrangements. Just wanted to get a sense of what the delinquency rates are on these various loan products that you have given that you have guarantees, you provide guarantees to your lending partners, if you could probably give a sense on that. And the other thing is in ZIP EMI is a product. You're scaling down ZIP is what I'm given to understand given your PPT. So ZIP EMI, any reason why the disbursements in ZIP EMI also fell? You recently announced an arrangement with Piramal.

Sure. So let me maybe take your second question first. In terms of the ZIP disbursal, you're right. I think that is -- that has fallen, but the focus on scaling back has been more on ZIP and not so much on ZIP EMI and not so much on ZIP. I think in general, the reason for the scale down is because of the broader environment. And I think if you look at the unsecured lending space in India, that continues to have a little bit of regulatory softening as well as softening in the market. And given that we are effectively working with partners who are going slow in this space, consequently, for us also, the distribution of this product has been slower this time. On your second question, I would say that if you look at our lending-related expenses, which is something that we report, then all through last year, if you look at the numbers, again, we've reported these numbers, that expense tended to be in the 3% to 4% range. Now if you see that expense is more in the 9% ballpark. This expense is a combination of the credit cost as well as other costs, direct costs relating to lending, such as underwriting, collection, et cetera, to some extent. And therefore, this subsumes the expected delinquency in our portfolio. I would also have to say that mathematically, this number again is higher this quarter because of the lower revenue base. But broadly, if you look at the 9 months, 12-month trend, that is where our delinquencies are.

And if I may get a sense because if you are entering into revised DLG contracts with your various lending partners, now how would your contribution margins look like post the new contracts versus what they were earlier with your lending partners? Would there be a massive difference, high or low I mean, just to get a sense.

So see, if you see our contribution margin, we have shown it for Q3 and Q2 also, if you see in our last presentation, is roughly -- was 48% in Q2. So even though the nature of the contracts are changing, but the net we make similar on a net basis, which is roughly 4% to 5% on a larger tenure product, which is the EMI. So although the nature is changing, but our net will remain same.

Understood. And you also are replacing volumes from your ZIP product with the FD-backed product. Do you see any major change -- like changes to your contribution margin because of that change?

So the ZIP product is scaling down, as you can see for the last 2 quarters. The new secured credit card product that we are trying to use to offset that is currently in beta. So it is not available at scale to all of our users. We expect to take the product out of beta and make it live on production for all users fairly soon. And the MDR on RuPay credit card is already there, as you are aware. So to that extent, we don't necessarily see the economics of the overall business changing much, but we have to wait for the card to scale up.

Understood. And one last question. So you have entered into these recent contracts for the FLDG. Now was that because you have roped in new partners? Any color on your partner-wise concentration, the AUM concentration, top 2, top 3, something on those lines for your ZIP and ZIP EMI products?

Yes. But before I answer that, I just want to add one more thing. On the secured credit card product, which we were just speaking about, an additional point to mention is because it's a secured product, therefore, there will be no credit cost on that because it's a fully secured FD-backed credit card. Now coming to your question on what are -- why DLG contracts are new. I just want to explain that a few years ago, digital lending guidelines came. Prior to that, people were doing loss guarantees of any nature, whatever was viable to two partners commercially. Then the lending guidelines -- digital lending guidelines came from RBI, which said that no loss guarantees are allowed, and that remained in force for 1 year. And then 1 year later, sometime last year in '23, it came out that loss guarantees up to 5% are allowed. And the final FAQs on that were only came out in the summer of '24. So it is not just MobiKwik, but in fact, all digital lenders who are platform businesses, all of the new DLG contracts are only coming into play now somewhere in the August, September '24 time frame because the FAQs only came in April, May from RBI. And there is no significant difference in these contracts from our previous contracts other than the fact that because of 5% -- up to 5% loss guarantees, the recognition of revenue is slightly lower in the initial period and the recognition of cost is slightly higher in the initial period. And this is why you will see the onetime change in the financial parameters of this business. We expect that this will season out over the next few quarters.

Understood. And just one small thing. What is wealth AUA? I just saw that in your KPIs, financial services. What does that pertain to around INR 11,000-odd crores of AUM, INR 11,000 crores.

Raghav sir, may we request you return to the question queue? Our next question comes from the line of Rushabh Doshi from Nirmiti Investment Advisors LLP.

Upasana. Congratulations on your successful results. So I have questions relating to MDR on the payment side. So, currently, are we receiving any MDR on Pocket UPI?

Not yet. We are not currently receiving any MDR on Pocket UPI.

So like could you just help me explain like -- because I had read that NPCI had recommended in 2023, like March 2023 that they are starting to allow MDR on PPI using UPI as a transaction method.

Yes. So this is Bipin. So yes, see, there is already, like I said, already an agreement across the ecosystem that there will be an MDR on all UPI transactions, not all UPI transactions, but a subset of UPI transactions, let's say, above a certain ticket.

Above 2,000, yes.

So that's again still under discussion. But like a broad parameter, which has been agreed is about 2,000. There will be a charge of 1.1% for all P2M transactions. However, I think that is still in the final stages of agreement across the multiple stakeholders. And we do expect that it will become real in a short period of time.

Okay. So, Bipin, I just wanted to understand like if we are able to, let's say, charge hypothetically next year an MDR on Pocket UPI, so how much our mix comes from Pocket UPI versus the normal volume?

So we are not really revealing the breakup. The overall payment GMV is available and a blended take rate is available in terms of the financial parameters disclosed. You can be assured that it will only add to this.

Yes. And I can add that broadly -- so I mean, we can directionally tell you that there is a strong push in the ecosystem, in the UPI ecosystem for usage of PPI. And I'm not sure if you're following the things. And the reason for that is it takes a lot of load away from the core banking system. It's safer from a fraud and a security point of view. And MobiKwik is leading in that front from -- because we have invested in creating the entire infrastructure for doing KYC and the wallet and a lot of people join MobiKwik just to use its wallet and then end up using Pocket UPI. So we do expect that it will benefit us in the long run in a very sustainable way. So we are pretty bullish on this.

I actually asked because according to my knowledge, HDFC Bank has started charging MDR on PPI via UPI. And my second question was that let's say, we benefited a lot after PayTM was forced to shut down their wallet business. So assuming that they get back their wallet license in 1 or 2 years, like whenever that happens, what impact are you expecting? Like could our customers switch back? And in worst case, what should we expect?

This is Upasana. So I just want to inform that even prior to the debacle of a competitor, if you look at our numbers for the last several years, you will see that the payments GMV has been growing at more than 100% for several years. And in -- of course, in this year, we have grown 3x. So what I can tell you is that we don't expect that there will be a significant impact for any new player joining the ecosystem. As you can see, many more people are applying now for wallet licenses.

And I just had a last question for the product of ZIP, so do you think that it's more of the current environment in terms of headwinds? Or it could also be possible that maybe a INR 5,000 ticket size product is very difficult to run and be profitable in the long run like across credit cycle?

Yes. So just briefly, I wanted to say that a small ticket product at INR 5,000, INR 10,000 ticket size might be nonprofitable for traditional players. But for a digital player like MobiKwik, we were making good margins on that product also, and we were scaling it at breakeven profitability. Now we don't believe that it is the profitability that is resulting in the scale down of this product. It is more that there is lower appetite amongst lending partners to do such a small ticket product. So that is why we are moving away to a co-branded RuPay credit card.

The next question comes from Rahul from Dolat Capital.

Yes. So congrats, MobiKwik team on the successful IPO. I have one question pertaining to this usage of funds. So I understand that bulk of it might have come towards the December end. And just wanted to understand, are we still on the planning mode in terms of the deployment? Or we have started deploying that towards the device CapEx plan that we had and towards the DLG portfolio allocation that we had and the user acquisition side, have we done any ramp-up on those elements? And the whole logic of understanding those things is to understand when we should start seeing benefit of this investment to show up on our growth?

So yes, I think in terms of the money raised via the IPO, I think that literally, we just completed it at the end of December, and we are just 1 month out. So the capital is not yet deployed per se. Of course, the company has been making investments even prior to the IPO in terms of how we want to scale up new business lines or new products, and that continues to be the case. But specifically, the capital raised in the IPO is not yet deployed. In fact, the only thing that has been even withdrawn from the IPO escrow account is just the GCP or the general corporate purpose. I can tell you that we will start making investments in the areas that we have already mentioned in our prospectus. And we hope that the outcome will start playing out in the upcoming quarters and years.

Right. And from this waiver agreement, is it safer to assume the bulk of those realignments are behind us? Or we might see some bit of it also coming in the subsequent quarters from now?

So Rahul, you would say that bulk of it is behind us. Of course, there could be small amounts going forward as well, but broadly, it is all behind us.

And to understand this slightly better, last time we had both in the revenue and cost side. This time, it's more on the cost side alone. So is there a balance on those numbers? Or it is unrelated that way?

No. So last quarter had a revenue impact also because by the time the guidelines had come in, there was unbilled revenue. But after that, of course, the revenue billing itself stopped. So yes, there is no balance as such, but that was the reason for having the revenue also last time.

Sure, sure. And in generally, if please Upasana or Bipin Preet could talk about what -- how you're seeing the financial services business. There is a certain change in the portfolio overall, both on the EMI as well as ZIP EMI and as well as the ZIP side. And there is a commentary that you have mentioned about how the market looks like. So from a 2- to 3-year perspective from this point, what is the right way to look into this market from our current base of GMV in that business, what is the right way to think about in terms of growth prospect. Will the DLG, as you said in your comment earlier, would be the way forward and thus the take rates should remain high at double-digit level? Or I think there was another remark that this might come off. So both in terms of GMV growth and take rate on the financial services, colors on that would be of great help.

So great question. Let me answer this. This is Bipin. See, long term, we are long on distribution of financial products, if you understand what I mean. In India, there is a huge demand for financial products and access is limited, especially when you consider people who are living in Tier 2, 3 and beyond because of the limitation of the physical branch network and just the general friction in access to financial products across the masses of India. And these masses are people who, let's say, earn between INR 2.5 lakhs -- from INR 2.5 lakhs to INR 10 lakhs or up to INR 12 lakh currently who are not even paying -- going to pay tax as per the latest budget. But the problem is that these people, we believe, are not necessarily well served when it comes to access of financial products. At the same time, they are all have started transacting digitally, and they are creating a digital footprint. So they are on app like MobiKwik. Basis that it's pretty straightforward to figure out what their financial needs are. It could be a credit card. It could be loan. It could be how do I invest a small amount of money? Do I invest it in gold? Do I invest it in fixed deposits? Which bank will give me the highest fixed deposit? Do I have to go to that branch? Or can I do it through MobiKwik app. Now all the distribution models have healthy margins, whether it is loans or savings. And so we think that we are sitting in a very good time, taking the long-term view and the seasonalities will exist in terms of unsecured lending going up and down or some regulatory changes. But if you think about distribution of financial products, we are extremely bullish long term across not just lending, but also savings and investment products. For example, on MobiKwik app today, you can book fixed deposits for some of the small finance banks, and it can give you 9% return. The same thing wouldn't have been available to many customers who wanted this. Otherwise, they will go to only the nearest bank branch or the bank that they bank with. So therefore, this is just one example. But same thing holds true for credit cards, which we talked about where especially being married with UPI, credit cards can take off and will take off RuPay credit cards. And so we have a play there as well in terms of our distribution partnership with banks. So I think we are -- what I'm trying to say is that long term, we are very bullish. And I think the margins will always be there because as a DSA model has always existed in India, what we are doing is we are becoming like a digital DSA for multiple financial products for the Indian markets. The users come in and use our wallet, use our UPI and then we help them understand what they need and help them distribute these financial products. And this is what the base model of MobiKwik is, which I think is going to continue for many, many years.

Yes. And just to understand the other expenses part of the business, is it safer to assume the IPO expenses charge would have also come into this to the extent which is not in the securities premium line. And that's why this number on a sequential basis may see some moderation going into Q4?

So the IPO expenses don't hit the P&L. They are netted off from the proceeds in a way and therefore, impact the share capital. On a Q-on-Q basis, if you see the fixed cost has actually held constant in the INR 111 crores, INR 115 crores sort of a ballpark ZIP code. And I think going forward, we will continue to synergize and optimize on cost, definitely not increase it, look at opportunities to optimize it further from here on.

We'll take one last question from the line of Anand Dama from Emkay Global.

Congratulations for your IPO. My first question is basically on your financial services business. So what's the average take rate -- gross take rate on the lending side? What's the broader FLDG cost that you expect going forward and what you have taken in -- and apart from the lending business, so I think you have a wealth AUM as well. So what's the broader take rate in that business insurance or any other product?

Yes, Anand, I'll take that question. So on the ZIP EMI product, okay? So our gross take rate is around 11%, okay? And against that, we have credit cost, we have underwriting cost, we have collection costs, we have marketing costs, right? So you add all these costs, so we make roughly 4% to 5% is a net.

So you've not taken out the FLDG costs. What will be the FLDG cost?

Yes, that's a 5%. So the 7% cost I said, 5% is DLG cost and 2% is all these underwriting costs, collection costs, marketing costs, et cetera.

And you're going to upfront the DLG cost in the first year itself and the revenue will flow something similar to what your peer is doing? How the accounting is going to be?

Can you repeat your question? It's not very clear for us.

Sure, sorry. So I think one of your peers basically tends to take the DLG cost upfront in that year when they basically get into the contract. And you say that basically the revenue will flow every year, right? So how will that work? How many partners that you have DLG arrangement and basically, whether DLG cost will keep coming every quarter as you basically get into more contracts?

So as Komal highlighted earlier, like to your question, how many partners that we are doing DLG, Komal already addressed that earlier, around 40%, we have moved to the DLG model. And majority of the cost is basically built in upfront in the DLG model.

Sure, sir. And is it possible for you to share the MPU for your payment business? And also why your customer acquisition cost is going up on a quarter-on-quarter?

So see, on your second question, why are the customer acquisition cost. So if you look at our customer acquisition cost and you compare it with other new age players, our customer acquisition cost is very, very smaller as compared to the other players, right? So there will be marginally up and down of INR 4, INR 5. If you see our last quarter was roughly around INR 34, this quarter, it is like INR 37. So INR 4, INR 5 cost will go up and down because if you see the main tool that we use to acquire new users is basically Google Adwords, et cetera, et cetera. And there are multiple factors like currency fluctuation, et cetera, also comes into picture, right? So those INR 4, INR 5 up and down will always be there. But if you compare our customer acquisition cost versus other players in the market, it's very low.

Sure. And is it possible for you to share the revenue model around your CBDC business that you're talking about? Obviously, it is too early, but still how the revenue model will work over there. And basically, the GMV that you have shared, should we assume that bulk of that GMV payment GMV is primarily our wallet business? And if yes, as the UPI business or UPI Life business tends to go up, where will your payment take rate be?

So on the first question, yes, CBDC has just literally launched, I think maybe a week ago or so. So I think you will have to wait for the revenue model to emerge there. We are literally sort of the pioneer in making that happen. So give us some time. I think we'll get back on that. I think mostly it will be left to the regulator to decide the revenue model. On your specific question on the payment GMV, so the payment GMV that we have comprises of -- I mentioned in the beginning also that we are the largest player in the wallet business. So of course, people are using the wallet on e-commerce merchants for their daily life use cases like food, grocery, travel, et cetera. And same thing in offline merchants also, whether they are organized retail, petrol pumps or small mom-and-pop stores. But apart from wallet, there is also bill payments, where also we are ranking #5 in terms of the GMV reported on the NPCI website. And then, of course, there is UPI. And then the third -- and after wallet, bill payments and UPI, there is also a small category of others, which is something that -- products that don't fit in any of these 3 categories. So that's roughly the mix of the payments GMV.

And basically, the share of UPI goes up and particularly UPI Lite and other UPI products, then you -- how does basically your net take rate looks like just wanted to ask?

So two things. See, UPI has been growing even through the years as we have seen our wallet business scale up. So that's number one. So in the last few years, it's not as if UPI was not growing. It was growing at a much faster clip. But even so, we were able to scale up our wallet business. Secondly, to answer your question with regard to UPI Lite, et cetera, I think the UPI Lite has very small limits in terms of per transaction value and daily limits. And also, it still hits the bank account of the user. And all of us that are on the call, we are very comfortable using bank UPI because we are not using our main savings account for our daily life UPI payments. And thereby, our main bank balance is always protected because we are not entering our main bank's pin. We are using a secondary bank account for UPI. That is not the case for most of India. They cannot afford two bank accounts and maintain average balances in both of them. Most Indians masses, they have a single bank account. So it is actually very risky for them to enter their bank pin for every INR 50, INR 100 transaction. And therefore, wallet is far more efficient and effective for them. It keeps their bank statement clutter-free. It keeps their bank balances protected. And also, there is a convenience and ease of use for daily life payment using a wallet as compared to regular bank UPI, which is why we are also seeing pocket UPI, which is interoperable wallet over UPI, where a MobiKwik user is able to scan the QR code deployed by any bank or any of our competitors and is still able to pay there. So pocket UPI is also a part of the UPI share now that we see scaling up, and we are definitely using it as a growth lever to increase our UPI market share.

You are making a case that the wallets will stay on, and basically that's the segment that you will focus on growing rather than UPI as such a lot of other people [indiscernible].

So more definitely, wallets are here to stay. In fact, very recently, I think there was an article in the Economic Times showcasing how wallet is back. Of course, it's a far more powerful payment instrument because when you are using UPI, you are essentially reliant on the debit or savings balance in your bank account, much like a debit card. But when it comes to wallet, especially a full KYC wallet, there is the ability to use credit also in it. And so it is a far more powerful instrument, so to speak. Also, I would like to tell you that not only has RBI given a PPI wallet license to roughly 50 entities, but very recently, another dozen people have applied for the wallet license. So it is not just MobiKwik, but many others who see value in this payment instrument. And what I am trying to say is that MobiKwik is the largest wallet right now, and we will continue to improve our market share on wallet. Of course, we understand that UPI is a much larger market, and there, we are coming from behind, but I showcased the two innovative products that we have, which are very differentiated from vanilla UPI, first being the RuPay credit card and second being Pocket UPI. Both of these, we will use to increase our UPI market share also. And interestingly, both of these payment instruments on UPI already have an MDR associated with them.

Ladies and gentlemen, we take that as our last question for today. I now hand the conference over to the management for closing comments.

Thank you, everyone, for joining our conference call today. For any follow-on questions, please feel free to reach out to our IR team, and we look forward to speaking to you again next quarter. Thank you.

Thank you. On behalf of Investec Capital, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.