FreeCharge has collaborated with Yes Bank to launch a virtual prepaid card called FreeCharge Go Card. This allows FreeCharge wallet customers to make online purchases anywhere that accepts cards. It levels the playing field for FreeCharge against competitors like PayTM and Oxigen who already had virtual prepaid cards. Similar to Oxigen's card with RBL Bank, FreeCharge's card can only be used online for now, but the company is exploring ways to enable offline use by partnering with POS providers. Partnerships between wallet companies and banks to launch virtual prepaid cards are mutually beneficial and expected to increase in 2016.

1. FreeCharge collaborates with Yes Bank to launch
virtual prepaid card in India
Analyst View Point Series

2. Table of Contents
Market Context
Key Insights
PayNXT360 View

3. Market Context
A recent trend was observed in the Indian payments market, wherein many banks
launched their own mobile wallets in order to compete with existing players such as
PayTM, Oxigen, PayUMoney, CitrusPay, FreeCharge, and MobiKwik. Banks decided
to venture into mobile wallet space becausewith increasing popularity of mobile
wallets, use of credit cards and debit cards started witnessing a decline, especially
among the millennials and Generation X, leading to loss of revenue.

4. Market Context
To ensure success of their own mobile wallets, few banks have started the practice of
not allowing customers of competing mobile wallets to recharge using their bank
accounts. For instance, in October 2015, State Bank of India (SBI) announcedthat it
would no longer allow PayTM mobile wallet customers to load money from SBI
accounts onto their wallet.Users of the Oxigen wallet also were not allowed by the
payment gateways of SBI and Citibank to load their wallets. Sometimes ICICI Bank’s
net banking service preventedOxigen’s wallets from being loaded on suspicion of
fraud. It was also found that some large e-retailers preferred not to have consumers
transact in their marketplaces using mobile wallets belonging to competing
companies.

5. Market Context
To counter this threat to their business, mobile wallet companies are launching their
own virtual prepaid cards. While banks and e-retailers can prevent customers from
using competing mobile walletson their sites, they cannot prevent customers from
using a virtual prepaid card. Interestingly, mobile wallet companies are collaborating
with banks to launch these virtual prepaid cards.

6. Key Insights
In 2016, FreeCharge mobile wallet launched a virtual prepaid cardnamed FreeCharge
Go Card in collaboration with Yes Bank and MasterCard. The virtual prepaid card
allows customers to use the FreeCharge wallet to make purchases on all online stores
in India, enabling wider acceptance.With launch of the virtual gift card, FreeCharge
has leveled the playing field with its competitors PayTM and Oxigen who already have
virtual prepaid cards in their portfolio.

7. Key Insights
PayTM had partnered with ICICI Bank to launch its virtual prepaid card in India, in
2015. This co-branded virtual card allows users to pay for purchases both online and
at any retail outlet that accepts MasterCard, Visa, and RuPay cards. Consumers who
want to use the card in brick and mortar stores can receive a physical card by paying
an additional fee. Oxigen launched a virtual prepaid card in partnership with RBL Bank
and Visa and can be used for making online transactions.

8. Key Insights
Similar to Oxigen,FreeCharge Go Card can also be used for making only online
transactions. However, FreeCharge is exploring other alternatives to enable offline
transactions with its mobile wallet. The company is partnering with ePaisa, Pine Labs,
and other retail Pont-of-Sale (POS) providers to facilitate acceptance of FreeCharge
mobile wallets. The company has also tied up with McDonald’s and Shoppers Stop to
enable offline acceptance of its wallets.

9. PayNXT360 View
PayNXT360 believes more such partnerships between mobile wallet operators and
banking and financial services companies to occur in 2016 to launch virtual prepaid
cards. These partnerships are mutually beneficial for both the parties as mobile
wallet companies are able to provide wider acceptance to customers and generate
additional revenues; while banks are able to tap into millions of mobile wallet users,
who might not be customers, to cross-sell their products and services. With entry of
more players, competition is expected to increase and virtual prepaid card issuers
are likely to differentiate their offerings by improvingproduct features that offer more
security and convenience.

10. To Know More
To know more and gain deeper understanding of how
mobile payment industry is shaping up in India, click here.