Freecharge’s the digital payments company acquired by Axis Bank from Snapdeal on October 6th 2017, has apparently shown improvement since its acquisition by the bank. In its financial results for the quarter ended 31st December 2017, Axis Bank has said that “All top line metrics since acquistion have improved materially, with total payment volumes up 42% and monthly active users increasing by 24%.” Apart from this, the presentation mentions that transaction volumes are up 17%, spends per user are up 22%, app installation is up 83% and platform engagement us up 32%. Axis Bank had bought Freecharge for $60 million.

Note that Axis Bank hasn’t shared absolute figures, and there really is no publicly available information on how Freecharge performed between the time that the acquisition from a financially struggling Snapdeal was announced, and the time that the deal closed. Thus, mere percentage numbers here can’t really be taken at face value. What the presentation mentions is that “Post acquisition activities remain on track” and “Focused campaigns have helped to improve all top line metrics since acquisition”.

In the past, and at present, Freecharge has spoke about the “strength of [Freecharge’s] acquisition engine” and the value of combining it “with the power of lending and deposit products of a bank “, as its strategic view on the acquisition.

“Conventional wisdom in banks has been to start with deposit products as the nucleus around which one creates a franchise. We believe it is equally possible to build a franchise around a powerful and unique payments platform solution, which is what we would hope to do with Freecharge”, the company had said on its previous earnings conference call. At that time, Freecharge had a user base of 54 million, a gross merchandise value of over Rs 7200 crores, and more importantly, 213 million transactions.

Post acquisition, Sangram Singh (Head-Cards and Payments, Axis Bank) was appointed the CEO of

MediaNama’s take

Loyalty is hard to come by in the wallets space, especially one that is dominated by one entity – Paytm, which itself is a bank. Freecharge still hasn’t recovered from its pre-acquisition decline, even though Similarweb isn’t the ideal comparison for traffic:

Post acquisition growth:

Pre acquisition decline:

In any case, since RBI policies seem to be geared towards making wallets redundant by increasing friction for wallet usage, and essentially are pushing the payments ecosystem towards greater bank-control, perhaps a bank is the right place for a wallet to be, if not the right kind of entity for a wallet to become. Payments Banks licenses were supposed to be “on tap”, when Raghuram Rajan had first announced them. Is that tap shut now? Will more wallets either shut down or be acquired by banks? What a sad end to a promising story (for most wallets). The RBI of 2008 was bank-led, and the mobile banking guidelines all but killed the aspirations of a promising mobile-payment ecosystem; history appears to be repeating itself.

Also, Shashi’s comments, when Freecharge was acquired still hold true:

For Axis Bank, if you ask me, it makes no sense to buy Freecharge, even for $60 million. It couldn’t have been for a wallet license: as a bank, they don’t need it. The customer acquisition would only have been for the wallet business and if they have plans to launch affiliate businesses. That said, payments is a massively loss making business at present, focused on consumer acquisition, and in a state of very high competition. It’s unlikely that they’ll have the agility that a Paytm or a Mobikwik have demonstrated, or that they’ll be willing to sink the kind of money that Alibaba allows Paytm to.