The Mojo is On for Instamojo The payment gateway start-up Instamojo had come close shutting down because it was losing all money.

Sampad Swain has come close to shutting down Instamojo at least two times. The payment gateway start-up he founded in 2012 had come close to losing all money. "First time was in mid-2013, second time was in end of 2014, and there was once later as well, which I hope would be the last time," said Swain in an interview with Entrepreneur India.

Owned by Instamojo Technologies Pvt. Ltd., today the startup not only allows payments but also a disburses loans, provides logistics services, a website, and marketing services to first-time entrepreneurs, and small and medium business enterprises. On Wednesday, the firm acquired GetMeAShop, a Gurugram-based SaaS (software as a service) provider, from Times Group's investment arm Time Internet Pvt. Ltd. This is in a bid to on board at least 10 million merchants in the next three years.

"The basic idea came out of another company we were working in late 2011. It was a little ahead of times, may be InMobi for smaller brands Instamojo was more of a side project," said Akash Gehani, co-founder, at the start-up.

Unlike payment gateways including RazorPay, PayPal, and PayU, which have fluctuating rates for merchants, Instamojo charges a standard 2-3 per cent fee on every transaction. Also, the firm does not ask for too many documents. "Getting people, who run SMEs, to use online payment gateways is difficult. There are a few initial transactions of INR 10 then INR 100. Our customers test the product first and then the trust comes in," said Swain. If the interface and the on-boarding procedure is too complicated, merchants would not use the platform as Instamojo does not provide any leverages such as cashback and deep discounts.

Typically, fintech companies including payment gateways, mobile wallets, and unified payments interface-based apps onboard users by offering cashback or actual cash. Search engine giant Google's payment app, when launched, deposited actual cash to almost all of its users for every transaction. Similarly, Softbank-back digital wallet Paytm also provided staggering cashbacks per for every transaction.

This is essentially a cash-burning model, which requires mega investments from deep-pocketed venture capitalists. Instamojo did not have either Alphabet Inc, or Softbank to rely on. Till date, the startup has raised at least $10 million from Blume Ventures. The venture capitla firm has so far backed micro-delivery platform Dunzo, an education start-up Unacademy among others. Other Instamojo investors include Japan's Anypay, Kalaari Capital, and Beenext Pte Ltd.

This amount is far less than Paytm's $1 billion, raised in November last year.

Founders Swain, Gehani, and Aditya Sengupta have to depend on organic and word-of-mouth growth. "Let's say if our total budget is INR 100 then we spend about INR 5-7 on marketing and advertising," said Swain.

Out of the 1.2 million merchants, 50-60 per cent use the payment gateway, which with such wafer-thin margin might not generate enough money to break-even. People who opt for other facilities, including marketing and logistics, pay a monthly or a yearly subscription.

Compared to many other fintech platforms out there, this platform does have a monetisation model. "Investor interest was very weak in the initial years. They probably did not understand the market and the scope. But I think now the times have changed," said Swain.

With the GetMeAShop acquisition, Instamojo also raised an undisclosed amount from Times Internet onboarding them as an investor.