FreeCharge to accelerate habit formation for m-wallets in India

FreeCharge recently announced its entry into the mobile wallet space by launching FreeCharge Digital Wallet. It was launched in partnership with YES Bank. FreeCharge, recently acquired by online e-commerce player Snapdeal, has also partnered with a payments bank licensee, FINO to build scale and reach the remote areas.

Govind Rajan, COO, FreeCharge and CSO, Snapdeal, discussed with Retailer Media about the prominence of wallets, lack of knowledge in transacting via smart-phones and accelerating habit formation for m-wallets in India.    

What is the relevance of having a wallet for a person with a Debit, Credit Card?

Mobile wallets are the digital equivalent to traditional wallets that people carry in their pockets. They can store all their debit and credit cards’ information at one place and use it across all online and offline outlets. We are witnessing a drastic shift in the consumer behaviour and the smartphone is connecting us economically in ways never imagined before.

We are now moving from a predominantly 2G network to 3G everywhere, and 4G is round the corner! Over 86 per cent of transactions on FreeCharge are already from mobile! The other truth of today is the fact that we all are time poor. We want to spend our time doing meaningful things, not standing in a queue. The cost of cash transaction is not just time, cash transactions actually cost a lot of money – estimated to be over 1 per cent of GDP.

Less than 5 per cent of transactions in India are cashless. Just as you don’t have snail mail, and increasingly turn to the Internet for entertainment and commerce, so will it be for payments, and here is where digital wallets come into the picture.

Why are people not transferring to using mobile wallets completely and why is the adoption less even after so much exposure?

Our focus is on building habit commerce in India: to get consumers to move from the habit of cash to e-cash. Habit creation is our primary goal. To create this habit, the consumer experience needs to be much better than cash – faster, more secure, and more rewarding. We already know how to create habit. Over 60 per cent of our consumers are monthly repeat, with an average of over 5 transactions a month. Two-thirds of our visitors end up transacting, which is a record! To accelerate this habit formation, we intend to be the most rewarding wallet. We have earmarked over a 1,000 Cr in various consumer incentives over the next 12 months to be the most rewarding wallet.

We believe the critical task in payments is to enable the ecosystem. It’s the digital ecosystem vs cash, one player cannot make the transformation happen. Our partnership with FINO will leverage this infrastructure to reach these remote areas, a wholly new sector for us to cater to. FINO has years of experience in reaching, managing the infrastructure in remote areas, in creating a payments’ backbone for these remote areas. We are a technology company with proven success. For example, we have handled a peak load of over 2,300 transactions a sec!

Our wallet is enabled with the latest in tech, ‘HCE, NFC, BLE’ and ‘QR’ code, and various new technologies we are exploring. Our partnership with FINO will leverage this infrastructure to reach these remote areas, a wholly new sector for us to cater to.

We strongly believe partnering with others is key, as one cannot fly solo. We believe to progress, you need a deep culture of partnerships to do that.

You need to be better for the consumer, you need to be better for the merchant – it’s important to have both perspectives. Consumers win because they have faster and more secure payments. Merchants win because they have lower costs: no hassles of cash management, and have additional analytics to drive new opportunities.

Mobile wallets are perfect use case for habit payments which users need to be made on a regular basis and using cash or cards for these payments is cumbersome and time consuming.

Is the adoption going to increase?

We believe we need to solve real problems in a way that consumers love. There is no better time than now to add momentum to the journey. With the 9-fold increase in mobile Internet users in the next three years, rural push in banking, the cashless economy is firmly in the horizon.

Consumers love us. For young consumers, FreeCharge is an iconic brand, consumers love the experience of transacting with us. The numbers speak for themselves - 87 million combined registered users with Snapdeal and FreeCharge, over 60 per cent monthly repeat customers on FreeCharge, with more than 5 transactions per month per user shows our track record of understanding customer requirements. We envision the future of payments to be digital and it is going to be all pervasive.

Who is your target audience?

Customer payments are generally for goods of two kinds. Stuff they need to buy, stuff that they love to buy. Mobile, Electricity bills, Metro and Rail tickets etc are things that we need to pay for. We don’t want to spend time paying for them. We want to tap all such payment options.

Today, these payments take time and are in many cases painful and not the quickest experience. These would logically be the place to start. Also, when we buy things we love, like that favourite dress, we want to be done with the payment quickly – the joy is in the dress not in paying for it.

So as consumers love and trust the experience of FreeCharge Wallet, they will use it to pretty much pay for everything. We will build habit by making sure the payment is quick and secure. The only challenge is how fast we can scale the availability.

What lies ahead?

We are working towards creating habit and foresee 2016 to be the year when the industry will recognise the importance of habit commerce.  Commerce is a two-way street. It’s all about partnerships. We are working with merchants to deliver a superior experience for them. Also, we believe that our twin perspectives – that of a merchant from our Snapdeal experience and Payments expertise from our FreeCharge experience will give us the twin perspectives needed to make commerce work, from both ends.  This is a much proven model – e.g. Taobao and Alipay in China, Ebay and PayPal in the US.