Freecharge tries the trusted route

Snapdeal pushes up ad spends on its wallet and targets non-metros; hopes to snap up a larger share of the digital payments market

Snapdeal is pulling out the stops in its pitch for Freecharge. Faced with the imminent threat of a new payment interface that could shutter down many mobile wallets and keen to counter the growing clout of market leader Paytm, the e-commerce company is focusing on building its mobile wallet as a trusted and easy-to-use replacement for cash. It is targeting buyers and merchants in tier II and III towns with a user interface that allows the two to talk to each other, introducing new products to wean customers away from cash and spending a hefty sum on an ongoing television campaign that talks about the convenience and safety of its payment platform.

The Freecharge campaign that was launched with the Indian Premier League last month is already pulling in results, the company says. The strategy to focus on Freecharge and not Snapdeal in the ongoing campaign is seen as a strategic move to build the wallet up as a mass market brand. Also, for Snapdeal, since this was the first brand communication about Freecharge since the acquisition in early 2015, it was necessary to make a big splash and IPL offered the best platform. While the company refused to divulge the amount spent on the campaign so far, it said that the ads have helped the brand gain greater acceptance among merchants and users.

Snapdeal, which acquired Freecharge around a year back, is keen to establish the brand close to the top in the hierarchy of wallet companies. Currently, industry sources said, Paytm leads the space with a huge margin. It has over 50 per cent share of the market, MobiKwik is at second spot with 12 per cent and Freecharge is third along with others making up 20 per cent of the market.

Freecharge pivoted from being a couponing-recharge platform to a wallet company after being acquired by Snapdeal and despite being a relative novice in the space, says it has built itself a loyal user base. "We were ranked as the second-most used mobile wallet within three months of the pivot, by a Nielsen report," said Govind Rajan, COO, Freecharge. He is not too overwhelmed by the other players, but with just four per cent of India's population using wallets currently, he believes that his biggest competition is cash.

In December, the report Rajan cites, states, "Freecharge had a 'reach' of 26 per cent and users typically spent 40 minutes a month on the platform." For Freecharge those numbers are a roadmap to its increasing influence. It is also a sign of the changing nature of online transactions in the country. According to a recent report by Centrum Broking titled 'Banking transactions, technological disruption', "Mobile banking has taken the country by storm, growing by 212 per cent in value terms in February 2016 over the same period in 2015 and by 131 per cent in volume." However the report also highlights the threat of UPI, a new payments interface that is expected to come into play in a few months, which could render many wallets redundant.

For wallets such as Freecharge, it is therefore important to build their base of users and instill a sense of loyalty before the tide turns against them. It is thus advertising on traditional media; television will continue to be the preferred mode of communication, the company says, as it has the widest appeal among its target users. It wants to close the gap with Paytm - the platform sees nine million transactions a day and currently has over 120 million users of which 40 per cent are active. Rajan is reluctant to put down specifics on the number of users that Freecharge has added on its own, but said that along with Snapdeal, they had a database of 100 million users. Its social pay section already has 100,000 users. He claimed that the app does a million transactions a day and the plan is to get to seven million by the end of FY17.

The bulk of Freecharge's consumers are expected to come in from the tier II and III towns "where most of our adoption is coming from," said Rajan. The advertisements have been crafted with this demographic in mind. The two campaigns currently on air emphasise the ease and convenience of Freecharge's chat-n-pay service, which enables customers to send and request money instantly. The service also allows buyers to talk to merchants before making the purchase, which the company hopes will build trust in the brand.

In its quest for market shares, the company is also wooing merchants. Rajan said, "The number of merchants has grown three times since September. We have tied up with Hypercity, Cafe Coffee Day, Mcdonald's, BookMyShow and more recently Cleartrip." The company has also employed agencies to bring mom and pop stores into the fold. Rajan believes that the recent campaigns are working well with the merchant community. "The number of merchants growing organically far outstrips those we are trying to sign on," he said.

With the Snapdeal connection, Rajan believes Freecharge has the muscle it needs to add customers. And while there is a race on among all mobile wallet providers to ramp up their customer base through discounts and deals, Rajan says, "We are focused solely on the sanity matrix."