Hailing from a business family, Kunal always knew he was destined to be an entrepreneur, but FreeCharge turned into something, he had never imagined. After studying Philosophy at Mumbai’s Wilson College, Kunal, an MBA dropout, started his career as a junior programmer at a startup. This is where Kunal met Sandeep Tandon, who not only invested in the company, but also became its co-founder.
FreeCharge was founded in 2010 as a mobile recharge and coupon firm where the customers get coupons worth the recharge amount; these coupons can be redeemed from the respective issuing merchants. Prima Facie, the business model still remains the same, but today you can recharge your Metro card, pay electricity bill and even shop at Snapdeal from FreeCharge.
Earlier this year, the company was acquired by online marketplace Snapdeal for about $400Mn. Today, together with Snapdeal, it reaches 87 Mn customers.
This month, Snapdeal launched “FreeCharge Wallet” a mobile wallet through its recharge and utility payments unit FreeCharge. Though FreeCharge does not own an open mobile wallet license as of now, the company has tied up with Yes Bank to launch its wallet and Fino tech for payment bank. The company has also received an “in-principle” approval for a semi-closed wallet and may launch its own wallet over time.
We caught up with Kunal Shah, founder and CEO of FreeCharge to know more about his journey, post-acquisition story and future plans for FreeCharge.
Here are the excerpts from the conversation:
Inc42: How has been the journey from founding FreeCharge to getting acquired by one of the top ecommerce company? What role has Snapdeal played for FreeCharge’s growth since then?
Kunal: The journey over the past 5 years has been eventful. The acquisition was one of the biggest announcements for the year. We have over the years added 27 Mn customers to FreeCharge.
Snapdeal presents massive upselling opportunities for FreeCharge as Snapdeal’s customer is an online shopper with high disposable income – perfect customer for being upsold digital payments. FreeCharge and Snapdeal are in perfect sync with each other leveraging both brands.
Inc42: How have things changed since the acquisition, in terms of your role and leadership at Freecharge?
Kunal: FreeCharge continues to function as an independent platform and all aspects of FreeCharge’s business remain intact.
Inc42: Every acquisition has some stories attached. They could be true or a myth – like a company dies a slow death after acquisition, founder has no role in acquisition and more. What is your take?
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Kunal: The partnership with Snapdeal is as an opportunity to accelerate our roadmap in India and reach out to millions of users across the country. As a brand, Snapdeal has a massive recall and we are very excited to be a part of the team that is creating the biggest digital commerce ecosystem of the country.
Inc42: In one of the interviews, you mentioned the major challenge to be the adoption of online transaction, customer indulge in a lot of other activities, apart from transaction. Is it still a major challenge? Have the ratios improved?
Kunal: The ratios have improved significantly. With government also initiating cashless transactions, the number of transactions is increasing day by day. The total digital transactions have surpassed the paper transactions in FY15. Digital transaction stands at $1.43 Tn further classified as online payments accounting for $0.38 Tn, whereas card payments are worth $1.04 Tn.
Therefore, our real competition is cash. We need to drive the shift from cash to cashless. The retention rate is high but the initial swing from cash to cashless or online payment/recharge is the tricky part.
Inc42: How do you see the market space and competition in terms of online/mobile recharge in India?
Kunal: People are adopting online transactions for the convenience and quick nature of process. The market space is still very fragmented in terms of consumer adoption and acceptance towards online/mobile recharge. India is the second largest mobile market in the world and the mobile penetration in the country is close to 72%, and nearly 95% of mobile subscribers use prepaid recharge plans. Thus, the scope in the market is huge, therefore all the companies are providing online/mobile recharge service have tremendous opportunities.
Inc42: With RBI giving “in-principle” approval to companies to launch payments banks, according to you, what are its implications?
Kunal: It is a good initiative taken by RBI, which will gradually support the economy. However, the 11 approved applications will increase consumer base for online payments. The consumers will be attracted towards a platform they trust and can conveniently use. Consumers will shift to the platform which delivers a sense of security and a seamless experience to them.
Inc42: How has been the growth like at FreeCharge, post acquisition? Please share some data around it; daily transactions, MoM growth etc.
Kunal: FreeCharge has grown to be one of the largest mobile first transaction platform with more than 27 Mn customers, 15 Mn app downloads and half a million transactions/day. The growth has paced up post the acquisition.
The industry is growing at the speed of light, thus the numbers change on a day to day basis. If the infrastructure, technology, internet penetration supports, the industry can grow at double or maybe triple the current rate.
Inc42: What all new can we expect at FreeCharge in the coming months, post the wallet launch, in terms of partnership?
Kunal: We have recently announced our exclusive partnership with India’s leading fashion retailer Shoppers Stop. As part of the exclusive tie-up, Shoppers Stop’s customers will be empowered with the feature rich FreeCharge Wallet. Customers will have the option to use their FreeCharge Wallet to make payments at all 74 Shoppers Stop stores across the country as well as on the webstore www.shoppersstop.com. The partnership will also extend to the Shoppers Stop Ltd. group companies such as 17 outlets of HyperCity, 95 stores of Crossword and 19 stores of HomeStop across India.
Inc42: Starting with mobile recharge, today FreeCharge has added more features like bill payments and Metro card recharge. But, what is the larger game plan in mind?
Kunal: FreeCharge’s aim is to make online payments almost frictionless for the customers. We want to own the habit commerce space with presence in utility payments and other boring payment a customer has to make on a regular basis. The mission is to organise utility and habit payments in India which is $100 Bn market. This will be done by giving customers the fastest, most secure and the most ubiquitous digital payment platform.
Over 90% of the 981 Mn telecom subscribers in the country use a prepaid connection, and roughly 30% of the overall subscribers use mobile internet – Freecharge has got a huge base to cover. This space was always competitive, right from the time it started. JustRecharge, RechargeItNow, MyRecharge and many more were in same business; some growing at 100% and some at 300% year-over-year. Enabling over a million transactions through its platform, FreeCharge has achieved a strong footing in this space.
As it moves past its rivals in the online recharge space, and enters into the realm of recharge through mobile app and online wallet space, it will have bigger rival to face like Paytm, PayU, Mobikwik and others who boasts million of users. It will be interesting to watch how FreeCharge expands its Digital Wallet across masses.