India’s ₹7.4-lakh crore bill payments market is set to witness intense competition between Paytm and Snapdeal. With the launch of Freecharge wallet on Tuesday, Snapdeal is taking on market leader Paytm head on that recently claimed to have more than 100 million wallet users in the country.
And Indian consumers might end up being the will be the winners. Competition is intense in this segment, and Freecharge has promised ₹ 1,000 crore cashback over the next 12 months for users. Paytm says it has already distributed ₹ 900 crore in cashback for its users over the past 12 months and says it plans to continue the cashback offers. “With 87 million combined registered users, we will ensure a seamless transition by offering easy integration and access to the platform,” Anand Chandrasekaran, the Chief Product Officer at Snapdeal said.
Loaded with funds, Snapdeal and Paytm have the potential to grow their customer base in digital bill payment market, which is currently dominated by banks offering electronic payments for utility bills. Freecharge however believes that it will become India’s most used wallet in the next 6 months on top of its transaction frequency and Snapdeal’s gross merchandise value.
While SoftBank, eBay and BlackRock are the major stakeholders in Snapdeal, Paytm is backed by Alibaba, the Chinese e-commerce company. “The combination of Freecharge wallet and Snapdeal will create one of the largest mobile commerce ecosystem,” Kunal Shah, the co-founder of Freecharge said on Tuesday. “Freecharge has tied up with Yes Bank to launch the wallet. It’s mind-boggling the way people are taking to digital payments,” he said
Vijay Shekhar Sharma, CEO and founder of Paytm, said that,“he is flattered by the imitation.” It is inevitable that others will copy a successful model. There is a network effect of more consumers bringing in more merchants which a new entrant can’t match. “With over 100 million users and 75 million transactions in a month, we are way ahead then anybody else in this segment. And with the payment bank in its bag, Paytm will operate in a different league. We can actually issue debit cards, if you choose to take one. I really don’t think they are even closer to catch us,”, he added.
“Paytm is witnessing nearly 50 million mobile and DTH recharge transactions every month, with 7-8 percent of its customers paying their bills online”, said Shankar Nath , senior vice president at Paytm. Freecharge clearly has lots of catching up to do.