Update: A spokesperson for FreeCharge said that Klickpay, a subsidiary of Snapdeal, had approached the RBI for a wallet licence before it acquired Freecharge in March 2015. In January 2016, Klickpay was renamed Freecharge Payment Technologies Private Limited and Accelyst is a super merchant for the company (not sure what that means).
Here is the full response:
Klickpay is a 100% subsidiary of Jasper Infotech Private Limited and was formed in the month of January 2015. Klickpay had already approached RBI for a PPI license before Accelyst Solutions Private Limited (Accelyst) was acquired by Jasper Infotech Private Limited in March 2015.
Klickpay received in-principle approval from RBI and final approval from RBI was received in the month of July 2016. In the month of January 2016, the name of Klickpay was changed to Freecharge Payment Technologies Private Limited (FCPTL).
Accelyst is a super merchant for FCPTL and recharge and bill payments transactions are done in Accelyst.
Earlier: It looks like FreeCharge has got a wallet licence from the Reserve Bank of India (RBI) this year. Note that FreeCharge had launched its wallet operations in a partnership with YES Bank back in September 2015 when it did not have a licence of its own. This is a pretty common practice where a payments company partners with a commercial bank to get the requisite approvals to operate a wallet. Some examples being PayU and Transerv when they partnered with RBL Bank.
The RBI says that the licence is valid from 14th July 2016 to 30 September 2021.
Note that the RBI’s website says that licence is issued to Freecharge Payment Technologies Private limited, previously known as Klickpay Payment Services Private Limited. Readers will remember that Klickpay was Snapdeal’s payment gateway solution which it launched in 2014.
Interestingly, the wallet licence was not given to Accelyst Solutions Private Limited, Freecharge’s registered company (it even lists it under their terms and conditions). Freecharge Payment Technologies was incorporated in January 2015 and its registered address is in New Delhi. The directors of the company include Ashish Chandra (grneral counself for Snapdeal), Anup Ajit Vikal (Snpdeal’s chief financial officer), Vivek Vikas Patankar (senior vice president at Snapdeal), Govind Rajan (CEO of Freecharge).
Snapdeal bought FreeCharge for a reported $450 million in 2015 and is positioning the wallet service as a default payment service along the lines of to eBay and PayPal. Both the e-commerce and mobile payments arms cross-sell each other’s businesses on their websites and apps.
Note that the payments company rejigged senior positions and Rajan was elevated to CEO and co-founder Kunal Shah was pushed to the chairman’s position.
We have written to Kunal Shah and Snapdeal for comments regarding getting the wallet licence and will update once we hear from them.
Transition to wallet licence
Payments company PayU had a digital wallet called PayU Money which was issued by RBL Bank. When it got its semi-closed prepaid wallet licence from the RBI, the company said that customers could shift their balances from the existing wallet on RBL Bank to their new wallet and customers will have the option to take out money into their accounts. They also mentioned that the licence would help cut some of the commercial expenses associated with getting a wallet from a commercial bank.
We have asked FreeCharge if customers will be able to take out money from the existing wallet and will update once we hear from them.