Axis Bank, India’s 3rd largest private sector bank, has entered into an agreement with Jasper Infotech Private Limited to acquire 100% stake in its subsidiaries viz. FreeCharge Payment Technologies Private Limited and Accelyst Solutions Private Limited, which together constitute the digital payments business under the “FreeCharge” brand. The acquisition marks the first such acquisition of a digital payments company by a bank in India.
Axis Bank has been a leader in key payment modes, viz. mobile banking, credit cards, debit cards, forex cards, UPI payments. The Bank has been driving digital acceptance and has established the second largest merchant network with over 4,33,000 POS machines. Axis Bank has also been actively participating in market leading payment innovations, through partnerships with Samsung Pay, Kochi Metro, BMTC, etc.
Welcoming FreeCharge to the Axis Bank family, Shikha Sharma, MD & CEO of Axis Bank said, “The acquisition of FreeCharge re-affirms Axis Bank’s determination to lead the journey of digitization of financial services. We expect FreeCharge to contribute significantly in our aspiration to serve the digital native and mobile-first young consumers of India.”
Kunal Bahl, Snapdeal Co-Founder & CEO said, “The Axis FreeCharge combination is a potent one that has the potential to make a large impact on the digital payments and banking space. It is a win-win deal that allows Snapdeal to further focus on our core e-commerce business, while giving Axis some of the most agile and innovative technology capabilities in the financial services space in India.”
Commenting on the sale of FreeCharge, Jason Kothari, interim CEO of FreeCharge and Chief Strategy & Investment Officer of Snapdeal said, “We are happy that FreeCharge has a new strong owner in Axis Bank and will embark on a new journey with the Bank. The entrepreneurial team at
FreeCharge brings with it immense technology and product expertise. I’m glad to have helped steer the company to this new home, and believe the synergies catalyzed by this acquisition sets the stage for further innovation and accelerated adoption of digital payments solutions in India.” Kothari will help with integration and then resume his position at Snapdeal.”
FreeCharge is a leading pan-India digital payments company with over 50 million registered wallet users and over 2,00,000 merchants. FreeCharge wallet is used extensively to make payments for telecom, DTH and broadband recharges and for utility payments including electricity, gas and water bills. Consumers across the country also use FreeCharge to pay for fuel purchases at HPCL & IOCL pumps, for travel and commute needs across IRCTC, redbus, Yatra.com, ClearTrip, goibibo.com, for food delivery and dining at Dominos, Zomato, Swiggy FreshMenu, foodpanda, for movie and event tickets at bookmyshow, Cinepolis and for their shopping needs across leading offline and online merchants including McDonalds (West and South), Pantaloons, Shoppers Stop, Café Coffee day, Barista, Heritage Fresh and many others.
With more than 90 percent of transactions originating from its app, FreeCharge is at the forefront of the mobile commerce revolution. Nearly 75% of its users are under 30 years, with 85% of active users accessing their financial services from a mobile device.
Digital payments and online consumption of financial services are growing on the back of “Digital India” initiatives. Rising usage of smartphones and increasing penetration of low-cost Internet are further expected to drive digital adoption. New age customers are ‘digital-native, mobile-first’ who prefer one-click payments products and anywhere banking.
Evolution of India Stack (i.e. Jan Dhan, Aadhaar and Mobile penetration) together with paperless presence, less ways of authentication has created a tipping point towards greater digitization of financial services. This acquisition is expected to help the Bank take a significant step towards digital distribution of financial products. The platform provides access to agile customer-facing technology, which will help the Bank to serve its existing customers better and approach new digitally native customers in an efficient manner.
The transaction is subject to regulatory approvals and is expected to conclude in by end of September 2017.
— Axis Bank (@AxisBank) July 27, 2017
Freecharge was acquired by Snapdeal in 2015 at around $400M. Axis bank acquired Freecharge at about 15% of what Snapdeal paid. Paytm, Mobikwik, PayPal, all where in the race to acquire Freecharge and finally Axis bank succeeded.
Axis bank, in a way has got Freecharge in a bargain price and this will help them to stay ahead in the banking space. The adoption of technology in banking and in the race to be the first, Freecharge acquisition will help Axis bank a lot. Axis bank doubled their customer base through this acquisition and got a fine team of Fintech talent as well. This will help them to stay ahead of other new age banking organizations as well as compete with Fintech companies. Freecharge young user base will help Axis bank to bolster their user base for Axis pay, UPI based digital payments app owned by Axis bank.
Axis Bank is the third largest private sector bank in India. Axis Bank offers the entire spectrum of services to customer segments covering Large and Mid-Corporates, SME, Agriculture and Retail Businesses. With its 3,304 domestic branches (including extension counters) and 14,163 ATMs across the country as on 31st March 2017, the network of Axis Bank spreads across 1,946 cities and towns, enabling the Bank to reach out to a large cross-section of customers with an array of products and services.
All major banks has their own payments app and the acquisition of Freecharge will surely give Axis bank an edge over others. Apart from their own payments bank, several banks has partnered with other payments app like Chillr – HDFC, Truecaller Pay – ICICI bank. Digital payments is booming in India, and several other players are also eyeing a share of their pie. Facebook owned WhatsApp, Alibaba groups Alipay, Amazon Pay and several other players are entering India’s digital space shortly.
We need to wait and see whether Axis bank’s renewed strategy will help Freecharge to gain the market share or still lose the race to new entrants and the existing ones.
Post your comments below on how Freecharge helps you in your digital payments. Do you think Axis bank’s acquisition of Freecharge is a well-timed strategy?