Founded by Kunal Shah and Sandeep Tandon, FreeCharge started in 2010 as a website for customers to recharge their cell phones. In April 2015, Snapdeal acquired FreeCharge for $400 million, providing it with the distribution network to penetrate rural pockets, although the two companies continue to operate separately. In September 2015, the companies announced the introduction of the semi-closed FreeCharge wallet. Since the company does not have a licence to run open-loop mobile wallet services — although it has in-principle RBI approval to run its own wallet — it has tied up with Yes Bank and MasterCard to introduce a virtual card called FreeCharge Go, which can be topped up from its wallet. This virtual card will be accepted across all online merchants and some offline stores in India. The company has also tied up with McDonalds and Shoppers Stop, which now accept payments from FreeCharge.
The card, which requires just a few seconds to be activated, can be used soon after activation once the user enters a 16-digit MasterCard number and CVV. All these details are further protected by an MPIN, which the user has to enter to be able to use the card. Nearly half a million people have already signed up for this virtual card, which can even be generated by desktop users. “Our overarching ambition has been to make people realise the benefits wallets bring and wean them away from the cash economy. We are already seeing that adoption,” says Shah. Before the launch of the wallet, FreeCharge had 30 million customers and hosted 200 million annual transactions on its website. Post the merger with Snapdeal, the total customer base for both firms is 93 million.
FreeCharge provides a range of services — online prepaid and postpaid mobile recharges, utility payments and the option of buying things offline and online through its merchant network. Since its launch in September, the FreeCharge-Snapdeal combine has seen 10 million users for its wallet services and both firms are targeting a combined wallet base of 35 million account holders. The company currently handles around 1 million transactions a day. Of this, 20% are bill payments, which is now the company’s fastest growing segment. Like other e-wallet companies, FreeCharge charges merchants for every transaction. The company is planning an investment of Rs.2,000 crore in cashbacks and promotions over the next 15 months. Shah justifies this by saying, “Once consumers switch to recharges and utility payments online, they never go back to offline. So, in this category, it makes sense to give free trials.”