Future Of The Indian Economy Is Cashless

by Sohini Bagchi    Apr 06, 2016


A mobile revolution is currently underway in the Indian economy, with over 80% of new broadband-quality internet connections being mobile driven. Likewise, mobile payments in India is seeing a steady rise, though it has a long way to go in a cash-dominated country where converting cash into digital money is the key challenge.

FreeCharge, an online mobile recharge platform, started by Kunal Shah in partnership, with Sandeep Tandon, and bought by Snapdeal for $400 million, is at the forefront of the mobile commerce. In a recent interaction with CXOtoday, Govind Rajan, Chief Operating Officer at FreeCharge, explainns how innovating around payment technology, partnerships and mechanisms, can make India a ‘cashless economy.’

 Please brief us about India’s current scenario in digital payments. How is it different from global scenario?

The digital payments landscape in India has witnessed unprecedented growth largely driven by increased smartphone penetration and rollout of 3G and 4G services at extremely affordable prices. With new initiatives like the UPI and the BBPS, we are well positioned as an economy to make the leap to digital payments. In addition, we believe making Aadhaar based authentication easier to deliver in markets – for example through OTP, and incentives for digital payments such as tax breaks will help spur the growth in digital payments.

Also, the cost of a cash transaction is not just time, cash transactions actually cost a lot of money – estimated to be over 1% of GDP. India also has 4 times as much cash in circulation compared to other BRIC countries. Digital payments have benefits for both consumers and merchants and globally it has been recognized as examples in countries like Sweden and Kenya. So the time is ripe!

What are the current challenges?

India remains a cash led country in transactions. There is an overwhelming preference for physical cash, even in urban cities despite the available alternatives. Another challenge that digital wallets are facing is the lack of acceptance across many used cases. As we create a simple easy to integrate technologies to onboard new merchants, there will be a rise in use cases further increasing the salience of digital payments.

Converting cash into digital money is another major challenge towards the adoption of digital wallets. It should be as simple as handling cash both for the consumers and the merchants. The adoption of wallets also needs to be incentivized initially and there should be common operating standards for everyone.

So, there are challenges in every new thing you start and the solution is to make a habit change. We have seen if the benefit is large enough, consumers will switch in droves. By making the wallet swifter and safer than cash, we believe consumers will move to a digital wallet. The user interface is super important so is a secure, swifter mode of payment than cash.  In 2016, digital payment will become every user’s habit. There is no doubt that the future of the Indian economy is cashless.

How companies like FreeCharge can ensure safety and security of user data transaction during e-payments & digital wallet?

Security and safety of user data are our prime concern. We have been voted as India’s most secure start-up and the second most preferred wallet. With 1 million transactions per day, it is evident that we understand customer requirements. Over 70% of our consumers are repeat consumers.  They transact on an average over 5 times a month which compares very well with other mechanisms like credit cards which are 3 times a month. Also, this reflects in our funnel conversion with over 2/3 of the visitors transacting, which is way ahead of its peers.

At FreeCharge, we have deployed a number of proprietary technologies to deliver best in class security. We are compliant with all major security standards such as PCI-DSS compliance. Our wallet has very stringent protocols on wallet velocity, device fingerprinting, device encryption and identification and hold limits which are designed to trap and eliminate fraud.  We have a fully dedicated and independent security team.

We have developed a homegrown technology ‘On-the-Go-Pin’ (OTP). OTP fulfills the RBI’S mandate for two-factor authentication and does not require even a single additional investment by retailers or customers. The technology developed by FreeCharge replaces the OTP received through the mobile airways. The pin resides within the phone and keeps changing every 3mins, making sure that the transaction is secure and swifter and is done within 10 seconds.

Do you foresee a change in consumer trends and perceptions towards digital payments? What are the drivers?

Yes, we foresee a change in consumer behavioral pattern. Today, they are spoilt for options and need everything in just one click. To shift customers from offline to online transaction habit - cash back, offers, discounts, rewards are some of the great perks to induce the habit of digital payments.

Slowly and steadily, adoption is increasing. As per a recent Nielsen report, FreeCharge is the 2nd most preferred wallet and this is a big achievement for us.

User experience is what drives customers and ensures loyalty. Additional factors like – progressive policies that encourage digitization, non-cash transactions, removal of payment gateway costs levied on online bill transactions, tax rebates and incentives for merchants will elevate the online transaction experience and accelerate the adoption to truly become a cashless economy.

Companies should focus on enhancing their user interface and reward long-term customers for loyalty. One of the primary pull factors for the digital payment industry is the ease of use. FreeCharge focuses on creating the habit and has therefore spent a lot of time and energy in creating a super quick UI. Over 99% of the transactions on FreeCharge are completed in less than 10 seconds. Our patented technology ‘On-The-Go-Pin’ allows the customers to complete offline transactions in the most secure and swift manner.

How is FreeCharge driving the cashless economy?

We are well on our way to becoming the digital payment OS of the country through creating an ecosystem of partnerships. We want digital wallet to be beneficial for both merchants and consumers.  Along with online merchants, FreeCharge is aggressively working with offline merchants as well for the quick adoption of digital payments. We launched FreeCharge Go which has already made our wallet ubiquitous in the online space.

For offline merchants, we have developed ‘On-the-go-pin’, with which merchants can easily start accepting digital payments without having to invest additional money in the infrastructure.

To further expand our wallet presence across India, we recently launched ‘Chat and Pay’, a first-of-its-kind service on our app for consumers and merchants. It is an engaging and secure way of enabling social payments both for Person-to-person (P2P) and Person to merchants (P2M). Chat N Pay brings this human emotion to payments, making them deeply engaging. It allows customers to pay and chat simultaneously with family, friends and merchants. The service enables merchants, small or large to accept digital payments in less than 1 minute after registering on the FreeCharge App. Going forward, merchants will also be able to upgrade their payment limits of INR 10,000 with necessary KYC verification.

FreeCharge is India’s fastest growing digital payments platform and has over 20 million users with a success rate of 99.5%. We are working towards coming up with much more solutions for customers and merchants to make digital payments acceptance all pervasive in India.

Tell us about your partnership with Ezetap and how it can simplify digital payments?

The partnership with Ezetap allows customers to make digital payments using FreeCharge wallet at over 40,000 POS terminals consisting of small and mid-sized retailers in the swiftest and safest manner. Today, customers are reluctant to use any medium other than cash for small ticket transactions due to the friction involved in the payment experience. This partnership eliminates friction by facilitating payments with just a few clicks in a secure payment method. The partnership draws us closer to our vision of creating an ecosystem where organized and unorganized merchant networks can come together and accept digital payments.

What’s your 2016 India roadmap?

We are working towards creating a habit and foresee 2016 as the year when the industry will recognize the importance of Habit commerce.  We have grown by leaps and bounds, with 1 million transactions a day and aiming to grow at an even higher pace and reach 7 million transactions per day by next fiscal year. We also plan to spend INR 2000 crore in cash backs and promotions in next 15 months to elevate the customer experience.

Commerce is a two-way street and we understand the needs of both consumers and merchants. We believe, it’s all about partnerships and we are working with both offline and online merchants to deliver a superior experience. Our goal is to expand our merchant base further and be associated with 5 million merchants in the next 18 months. Also, we believe that our twin perspectives – that of a merchant from our Snapdeal experience and payments expertise from our FreeCharge experience gives us an edge to make commerce work, from both ends.  We will expand our platform to bring more services on board and will use IPL as a platform to roll out new services.