Private sector lender Axis Bank has decided to acquire digital wallet FreeCharge from e-commerce firm Snapdeal in an all cash deal worth ₹385 crore.
Axis bank said in a statement that it has entered in an agreement with Jasper Infotech Private Limited (which owns and operate Snapdeal) 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.
“This acquisition will give us a new set of customers,” Rajiv Anand, executive director, Axis Bank told the The Hindu .
“The kind of customers we will get is the mobile first, digital only customers who are in the age bracket of 17-25 years,” he said adding that Axis Bank has a 5% market share which means 95% are not their customers indicating the opportunity to scale up.The acquisition will need approval from the RBI.
According to RBI regulations, any bank can have only one license for a prepaid payments instrument (PPI) like FreeCharge. Since Axis Bank already have an PPI license, the lender have to surrender one of the licenses. Axis Bank wants to retain the FreeCharge brand.
“Our intention, subject to regulatory approvals, to run Freecharge as a separate subsidiary,” he said.
FreeCharge has 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.
Mr. Anand said Axis Bank will look to broaden the scope of services offered by the e-wallet.
“As we go forward we would like to add other services in the payments platform and also other Axis Bank products like digital savings bank account, instant loans, credit card application, buying insurance and mutual fund products, among others,” Mr Anand said.
