Freecharge will not go the cashback way: CEO Rajan

The new CEO claims cashbacks and other discounts don't make for sticky customers

Payments platform Freecharge would not use cashbacks to win against Paytm and Mobikwik, said its new chief executive Govind Rajan.

“Promotions only draw the first set of customers. After that, it is the fact that it takes just about 10 seconds to complete a transaction that will keep them with us,” he said.

Rajan was nonchalant that other service providers like Paytm were using cashbacks to retain customers. “Promotions are not the right way to build sticky customers,” he pointed out and added promoted transactions received just 20 per cent of the traffic on Freecharge.

Rajan said Freecharge was conducting one million transactions a day and was targeting seven million by the end of 2016-17. Freecharge has seen a fourfold increase in the number of transactions since its acquisition by Snapdeal and subsequent launch as a wallet in October.

In December, a Nielsen report stated Freecharge had a reach of 26 per cent and users typically spent 40 minutes a month on the platform.

Source said MobiKwik had 50 per cent active users — those who transact two times a month — in its base of 30 million and Paytm had 40 per cent active users in its base of 120 million. Rajan, however, said Freecharge was only interested in the number of transactions. He said a perfect transaction happened within 10 seconds, was safe and had good communication.

Freecharge has an average ticket size of Rs  250. The company tied up with Cafe Coffee Day last month and said other tie-ups were likely. “The majority of merchants who come on our platform will come on their own,” Rajan said.

YESTERDAY AND TODAY

• August 2010: Founded by Kunal Shah and Sandeep Tandon
   
• 2011: Undisclosed amount from Sequoia as seed funding
   
• January 2012: Raised another Rs 20 crore from Sequoia in Series-A funding
   
• 2013: Alok Goel leaves Redbus to join as Freecharge CEO
   
• September 2014: Freecharge raises $33 million in Series-B funding from Sequoia Capital
   
• February 2015: Raises $80 million in Series-C from Sequoia Capital, along with Sofina and RuNet
   
• April 2015: Snapdeal acquires Freecharge  for a reported for $400 million
   
• October 2015: Freecharge launches as a wallet
   
• May 2016: Govind Rajan is CEO of Freecharge