When we started Zerodha, we consciously decided to charge an account opening fee for two reasons:
There was no Aadhaar or eSign until 2016–17. Account opening was completely offline, which meant there was a cost involved. So we had to charge an account opening fee to cover the cost.
We wanted to attract users who were serious because there’s an ongoing cost for every user we add.
But things have changed over the years with fully digital onboarding, etc., and we had to change our stance. A few months ago, we made account openings free for those under 25 to encourage them to start investing early. But now we are making it free for all resident Indians.
In this video, we ask @nithin about the reasons for making account opening free. He also discusses the historical context for why we initially charged a fee and how we have evolved over the years.
Aadhaar, esign etc came like 8 years ago. After Groww became number 1 in terms of numbers of users, suddenly everyone in Zerodha is having urges to encourage investing early. So generous and surely not coincidental : )
Seems counter intuitive when you say you might have to charge for equity delivery due to SEBI changes on exchange-broker revenue sharing model and then go on to reduce even more of the revenue?
And the primary reason I paid for account opening was that you stated if we do not pay for opening, zerodha will be forced to recover CDSL opening fees in shady ways and annoying notifications which are common in all other brokerages unfortunately
Zerodha realised it way too late only after Groww left Zerodha way behind in no. of demat account openings and facing the new reality that maybe Groww’s earnings model might be better in future (as all the talks of shake up in F&O segment; and Zerodha relied heavily on revenues from derivates trading).
*The truth is : Zerodha is forced by the competition to let go of the Account opening charges.
The reason sounds lame, as they mentioned, the process of account opening became digital since 2017, yet it took them this long to even consider waiving off of account opening fees.
If they don’t incur any cost since the process became digital, why were they charging the fees up until now?
Nothing has changed since 2017 right, the process is still the same.
I wonder why Zerodha feels obligated to give philosophy here. Business environments change and businesses make their decisions accordingly. People are not interested why you charged previously and why you are not charging now. People are interested in a solid platform that performs well all the time with minimum issues. I haven’t seen Zerodha being philosophical when people face technical glitches, Zerodha is completely silent then…
