FreeCharge, an online recharge company owned by Snapdeal, recently filed a patent and claims that it is the only Indian start-up able to do so. With various payment options such as HCE (Host Card Emulation), NFC (Near Field Communication), BLE (Bluetooth Low Energy) and QR (Quick Response) code, the company claims to have handled a peak load of over 2,300 transactions a second. Kunal Shah, co-founder and CEO at FreeCharge, in an interaction with Avanish Tiwary explains how its new patented technology reduces the time taken to transact and increases the chance of a successful transaction. Excerpts:
How does the new patented technology on the go pin work?
On The Go Pin is aimed at making both online as well as offline transactions faster by cutting the delay caused in receiving the OTP (one time password) through text message. Our studies show that it takes as much as a minute for the OTP to be delivered. Also, in 5-10% of the cases the OTP does not get delivered within the transaction time. The technology developed by FreeCharge replaces the OTP received through the mobile airways with a pin that resides within the phone and keeps changing every few seconds. From the back end, the servers of the bank and the merchants would be verifying the pin so that the transaction can be processed seamlessly and much faster. This makes the transaction swifter and safer.
Does it dilute the RBI mandated two-factor authentication?
The On the Go Pin technology fulfills the RBI mandate for two factor authentication. The RBI mandates a two-factor authentication which is of a higher standard than an MPIN. The on the go pin is actually safer than a standard MPIN as it is dynamic. Not only it is safer, it is swifter too. It will eliminate wait time for both the retailers as well as customers since often there is a considerable delay in receiving OTP due to network connectivity issues.
Has transactions using on the go pin started?
We have already struck a deal with Shopper’s Stop with which the new technology will be implemented in all transactions. In addition we are rolling out a slew of merchant products in December. We will enable it for all offline and online transactions.
What is the partnership with Fino PayTech?
We partnered with Yes Bank and payment bank licensee Fino PayTech to launch our mobile wallet service, which has already witnessed over 10 million users within 60 days of customer launch. Our partnership is in early stage and we are trying to figure out which market to start with. The partnership will enable us to tap into a whole new segment of consumers. FINO will be able to provide access to its consumers as it builds deep reach into rural and undeserved India.
We believe the critical task in payments is to enable the ecosystem. It is the digital ecosystem versus cash, and one player cannot make the transformation happen. Our partnership with FINO will leverage this infrastructure to reach these remote areas, a wholly new sector for us to cater to. FINO has years of experience in reaching, managing the infrastructure in remote areas, in creating a payments backbone for these remote areas.
What is the reason for spending Rs 2,000 crore on discounts and cash backs?
We need a lot many people to try our services and we believe our incentive works really well to get people hooked to us or at least try out our product. Once they give us a try they don’t go back to old behaviour. Considering the smart phone growth and the internet adoption on phones, it makes all the sense to time this move so more people can try out discounts and cash backs from our platform.