September, 24, 2017
mChek’s progression
15 Oct
Posted by S. PREM KUMAR

Gautam Shiknis, CEO, mChek, is convinced mobile payments can power financial inclusion not only in India but also globally. He is taking steps to make this happen


Gautam Shiknis says he wants mChek to become a global leader in the mobile payments space. He’s thinking big but agrees that the whole industry is still underground and below the tipping point. “It’s certainly a nascent category right now,” he says. It’s an industry in which four different parties – banks, telecom companies, mobile payment processing firms and customers – need to come together.

Today, the biggest potential use of mobile payments comes into play to enable financial inclusion. Thanks to the telecom revolution in the country, the mobile subscriber base touched 729 million in January 2011. However, a large percentage of these cell phone users are still unbanked. The idea is if banking transactions can be done over the phone, that’d solve several problems for both categories – people who’re currently unbanked and banks. mChek has built a technology platform over which a SIM card of a cell phone can connect over a secure layer to a bank account or to a credit or debit card. Hence, once an unbanked person creates a bank account, he can use his phone to receive and transfer money, without taxing a bank’s facility. Today, mChek has acquired a Banking Coordinator (BC) license and opens accounts in partner banks for customers. Money can then be transferred from one cell phone to another, since these phones are each connected to bank accounts (or credit/debit cards). However, going after financial inclusion wasn’t mChek’s plan A.

Plan A: Mobile payments for bill payments and mobile recharge

Founded in 2006, mChek was initially focused on mobile payments for mobile recharge (pre-paid cell phone users could recharge using mChek), bill payments and person-to-person money transfer. Even at that time, the company knew that it could play a critical role in the financial inclusion process, but that was not its primary focus. “One of the big challenges was lack of sufficient revenue. The business had been running for four years yet, we could not bring in the revenues we expected,” says Shiknis. He decided to take action and presented to the board of directors a plan to turnaround mChek.

Plan B: Expand globally and grow each SBU

Shiknis wanted to re-organize the focus of the company. He wanted to setup four SBUs (strategic business units) – telecom, banking, international licenses and international markets, and the merchants division – as opposed to being organized by function (product, marketing, sales, among others). Each of these units had to grow and more importantly, bring in revenues. “We had to change the thinking of the organization. We wanted people to think of revenue centres rather than cost centres,” says Shiknis.

The telecom SBU would continue to grow the earlier business, processing mobile recharges. But the two big changes were the emphasis on partnering with banks to enable financial inclusion and establishing mChek in international markets. “There was some concern about spreading ourselves too thin by expanding into global markets, but then we decided to do it in parallel.”

Today, mChek is also present in Sri Lanka, Bangladesh, Chile and Nigeria. The model adopted was to rope in local entrepreneurs who would run mChek in each of these countries. The technology platform would be licensed and it was a cost effective model. Shiknis carefully tracks the progress in these international markets. In the merchants’ business unit, a customer could buy a movie ticket from a partner company (like BookMyShow) through the mChek platform. This business is still in the early phase. Return on investment (ROI) and scalability of each business unit is monitored. Since there are multiple stakeholders – banks, telecom companies and mChek – working together to serve a customer, the revenue split is also measured with diligence.

Key lesson learnt from the mChek journey:

mChek always had global plans but didn’t expand to other countries because of the fear of spreading itself too thin. Shiknis, however, knew that tackling multiple global markets in parallel could solve the problem of very low revenues. It was the same technology and the model of roping in local entrepreneurs meant it was low-cost model. Today, he has a dashboard that measures progress in each country. ROI and scalability are continuously measured. A dashboard to measure the financial health of the company is crucial to make progress.

Today, mChek has reached cash flow breakeven month-on-month. Shiknis says, “In one year, we’ve turned around. This year we’ll touch revenues of US $2 million. Before

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