FreeCharge, the digital payments platform of Snapdeal, is increasingly playing an important role in the e-commerce company's overall business strategy with both the entities cross-selling on each other's platform. According to a Nielsen report, FreeCharge holds the second position-- after Paytm--in India's mobile wallets space. But there is apprehension that the introduction of the Unified Payments Interface (UPI), a new payments system, could make mobile wallets redundant. FreeCharge, however, isn't worried about the UPI, says Govind Rajan, who was elevated last week as the company's CEO from its chief operating officer. In this interview with Techcircle.in, Rajan also says FreeCharge will continue to focus on being a payments company and may look at other related areas in the long run. Excerpts:
Will the introduction of the UPI impact you adversely? These initiatives are good for FreeCharge as well. Today, the transaction success rate when you use a payment gateway for payments is as low as 75%. The UPI can take that to 85-90%. The UPI is basically a mechanism to connect a consumer with a payment option directly from her bank account. So it is primarily in competition with payment gateways, which is used even by mobile wallets. All we may have to do is shift to the UPI instead of a payment gateway. Other than that, it makes no difference to us.
There is a feeling that mobile wallets may not be able to survive as standalone wallet players. Are you diversifying your product offerings? For instance, Paytm is also focusing on its marketplace. Let me put it like this. There are payment gateways and there are wallets. Have payment gateways really impacted wallets? No. Instead, they work along with them.
We will always be focused on being a payments company and believe that only 2% of Indians do not use cash at the retail point of sale. This is a huge opportunity, but there is also the challenge of market development. What we have to do is come up with a solution that is easier than cash payments. We are happy to work with everybody in the ecosystem who can help with a better consumer experience and present alternatives to cash. We believe if we are part of a growing ecosystem, our market share will grow.
Over a period of time, heavy mobile usage could give insights to customer behaviour and credit worthiness. We are exploring the possibility of a consumer loans marketplace, but it is still too early.
How many merchants do you have on your platform? We have about 90,000 merchants (both online and offline) and our objective is to bring this number to 5 million in the next 18 months. We don't distinguish between an online and an offline merchant because their needs are the same.
You recently launched the FreeCharge Go virtual pre-paid card in association with MasterCard. What was the idea behind introducing this card? Through this tie-up, FreeCharge is now accepted as a payment option at all online merchants. While we would like to reach out to the merchants directly, it is not possible to reach every merchant on the day they go live. Since its launch in February, we have issued over 2 million cards and reached one million in just a month. For MasterCard, this is its largest pre-paid card programme anywhere in the world.
Is the acceptance infrastructure for a cashless economy strong enough to match the growing number of cards or other payment tools? We think that one of the biggest issues in our country is the lack of acceptance. Our belief is that both consumers and merchants need something as simple as a mobile app to make and accept payments. Merchant acceptance is one of the biggest challenges in the country and we believe that the easiest way to address it is by using smartphones as the acceptance device.
Do you see any scope for getting government payment contracts? I think the government has put forward a set of policies and we welcome that. The government's focus on removing surcharges and making sure that electronic transactions are as easy to execute as non-electronic transactions is a positive sign. As on today, you can pay your electricity bills using FreeCharge. It definitely is a possibility, but I cannot speak for the government.
Do you think non-availability of your services in regional languages is an impediment to your growth? Our app language is a language of design and numbers, which is something universal. I think there is a huge opportunity for us to be present as a payment system in many operating systems that cater to regional needs. We can tie up with them, but that does not mean we need to change our design language. In the larger scheme of things, it's absolutely essential for consumers to navigate in an easy manner to adopt new habits and one way to solve this is by bringing it in regional languages. The point I am trying to make is that we are already well-placed there because of our simple and easy-to-use interface.
When can we expect to see FreeCharge break even? We are in the process of building a habit. Our product has a 72% repeat rate, which very few products have. We have an average of 4.8 transactions per month by an existing user. In a span of five months, we reached a million users and are growing at 15-20% month on month. As we introduce more products and services, we hope to have 7 million users.
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