Mastercard-backed Instamojo is targeting a return to profitability within the next 18 months, following a significant regulatory setback when the Reserve Bank of India (RBI) returned its payment aggregator (PA) licence application last year. With the one-year reapplication bar now lifted, the company is considering resubmitting its application for the PA licence.
Sampad Swain, co-founder and CEO of Instamojo, revealed to FE that the company aims to achieve Rs 100 crore in revenue and Rs 50 crore in profit after tax by FY26. “We’ve regained 60% of our pre-PA-licence return revenue in a year’s time,” Swain said.
The regulatory decision had an immediate and severe impact on Instamojo. “We were on track to register $1.5 million in profits for FY24,” Swain explained. Instead, the company saw a 70% revenue drop in Q3 FY24 and had to reduce its workforce by around 20%.
Payments had contributed nearly 80% of the company’s revenue before the licence setback.
Since then, Instamojo has pivoted to a Digital Commerce as a Service (DCaaS) model. The company is now focusing on cross-selling its e-commerce services—such as setting up and managing online stores—to existing and former customers, while expanding its inside sales and support teams.
Globally, Shopify in Canada has successfully executed a similar pivot, but its transition was fueled by substantial funding and strategic acquisitions. Shopify has spent billions on acquisitions like Deliverr ($2.1 billion) and 6 River Systems ($450 million), driving its revenue from $2.9 billion in FY20 to $5.6 billion in FY22.
Instamojo, with just $15 million in total funding, lacks the financial muscle for such large-scale acquisitions. This funding gap limits its ability to scale its offerings or expand its market reach through strategic purchases.
Although Shopify has penetrated the Indian market, its higher pricing has driven many users towards more affordable alternatives like Meesho and Flipkart, which offer e-commerce solutions with in-house logistics support. Meanwhile, other Indian startups in the space are also grappling with profitability. Dukaan, despite raising over $20 million, reported Rs 10 crore in revenue and a net loss of Rs 35 crore in FY23. Similarly, DotPe, with over $90 million in funding, posted a loss of Rs 72 crore on revenues of Rs 36.9 crore in FY23.
Despite these industry-wide challenges, Swain remains optimistic about Instamojo’s future in the MSME sector. “We know exactly what the consumer problems are, how much they can afford while moving from 0 to 1, and then scaling up from there,” he noted. The company is leveraging its decade-long experience with MSMEs and a low-cost customer acquisition strategy to fuel its recovery and long-term growth.