NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, October 1, 2015

Last week, retail chain Shoppers Stop Ltd tied up with mobile wallet FreeCharge, allowing customers to use FreeCharge wallets to make payments across 74 Shoppers Stop outlets, 17 HyperCity stores, 95 Crossword outlets, 19 HomeStop stores, and its online marketplace.

FreeCharge is owned by e-commerce firm Snapdeal and Shoppers Stop by the K. Raheja Group.

“This partnership will give us a strong foothold in the digital payment ecosystem and ease the payment process for customers who are increasingly preferring to go cashless,” Govind Shrikhande, managing director and customer care associate at Shoppers Stop Ltd, said.

In recent months, a bunch of bricks-and-mortar retailers, including Future Group’s Big Bazaar, cafes like Café Coffee Day and Costa Coffee, quick service restaurants such as KFC and Pizza Hut, have tied up with mobile wallets such as Paytm, MobiKwik, Oxigen and PayU to expand their consumer base and offer convenience in payment.

Such tie-ups between bricks-and-mortar retailers and mobile wallets offer consumers a convenient payment option, cash-back offers and additional discounts. While retailers get scope for targeted marketing and a chance to reduce operational costs, wallets get more consumers, resulting in more transactions and a higher ticket size, and thus better revenue.

“Wallets make smaller transactions hassle-free, and most of the people are not comfortable using credit or debit cards for every small transactions. For us, the focus is to build the ecosystem, and consumers’ habits. There will be more such tie-ups, and the list is long. Wallets will play an important role in building a cashless economy in a secure way,” said Govind Rajan, chief operating officer, FreeCharge, and chief strategy officer, Snapdeal.