CRED- Simplify Your Credit Cards Payments and Get Exciting Rewards!

1. Overview

People love to splurge once in a while and they love to do it with credit cards. Credit cards have an integral role to play in all our lives as they help to purchase things at times when our budget is insufficient to meet certain costs without having to wait for our next month’s salaries or so. But, we also realize the importance of paying our credit card bills on time and even try to prioritize paying these credit card payments simply and easily. However, where we possess credit cards from different banks with a separate billing cycles of their own. Thankfully, now we have an app that could help its users to gather all such information, sends you reminders to carry out timely payments, and even offers you rewards for it.

Founded in the year 2018 by serial entrepreneur Kunal Shah, CRED is a fin-tech start-up that offers a platform to its users for making credit card payments online and receiving instant offers, rewards and cashback offers for the same. It was primarily started to make credit more simple, affordable, and accessible to the Indian masses. In the words of Kunal Shah, CEO & Founder of CRED, “Our goal was very simple. We intended to create a platform that could actually improve our lives and offer more privileges& benefits to people for having good credit scores, and thus create a flywheel effect for more people who wished to improve their credit scores”.

After raising funding of $215 million from new investors Falcon Edge Capital and existing investor Coatue Management LLP, the fin-tech start-up entered the unicorn club at a valuation of $2.2 billion with a following of a whopping six million users within such a short time. Read further to find out more about CRED, its founders & team, business model & revenue sources, funding raised, key competitors, and more!

2. So, How do CRED works?

CRED is an Indian startup company that enables its members to manage their credit card bill payments and make their life easier. Any user who wishes to avail of Cred offers & benefits needs to register online and feed his/her mobile number so that the app could check its credit score through Cibil, CRIF, and Experian.CRED will get access to the mail identification for reading and scanning credit card receipts like due dates and service statements.

If the credit score of the user is more than 750 or above, he gets access to CRED and can start making credit card payments from the list of banks on the online platform. Thereafter, each time the registered user pays his credit card bills, his account is credited with CRED coins that could be redeemed for exclusive discount offers and rewards across a variety of lifestyle categories. However, if the credit score of a user is lesser than 750, he is put on the waitlist.

Kunal Shah explained in an interview “Through CRED, we want to empower our members with visibility into their credit cards, helping them to escape the debt trap and use the credits responsibly earned by them.

Accordingly, members are rewarded with CRED coins that are used to purchase vouchers applicable in more than 1,000 retail outlets such as Levi’s or Gap or on popular online retail stores like Flipkart or Amazon and avail discount offers on other platforms like Zomato, Puma, TatCliQ, Dineout, and Curefit.

Apart from facilitating credit card payments, the fin-tech platform also allows its customers to make monthly house rent payment creds (through RentPay) and also avail benefits of short-term credit lines that the app now offers and takes utmost care in protecting the data and the information of the users. The CRED app tagline says ‘Suraksha Aur Bharosa Dono’ which assures security and safety of payment for its users.

3. CRED- Story of Inception

According to a Your story article, after Kunal Shah’s previous start-up FreeCharge was acquired by Snapdeal in the year 2015, after which he traveled to a lot of developed nations where he came to notice a great deal of trust extended by the system upon the common people. For instance, there were self-checkout counters in superstores and self–service at petrol pumps without any attendants, etc. that helped to create a frictionless and inclusive environment in which all costs and restraints relating to transactions are absent while the case was the opposite in India where no one was doing anything for a section of the population which was law-abiding, dependable and honest.

Kunal explained “For years, start-ups and governments have been focused on masses primarily, but no one considered a segment of people who paid taxes and no one intended to resolve their problems despite their trustworthiness and honesty.

Even the credit system in India was also stringent and left a great degree of scope for confusion and errors which the trustworthy segment of the public does not deserve. Kunal stated “I felt the urge to create a system that rewards the trustworthiness and creditworthiness of people of India and inspires others to do the same.

Hence, CRED was founded to resolve the problem of honest taxpayers and reward them with attractive rewards for such. Since the initial motivation for founding  CRED came from resolving prevalent trust issues of the credit system in society, Kunal prefers it to be ‘TrustTech’ rather than a Fintech start-up.

4. Founder of Cred- Kunal Shah

CRED is the brainchild of Kunal Shah. Interestingly, Kunal Shah is neither from an engineering or commerce education background. Instead, he graduated in philosophy from Wilson College, Bombay, and took admission an MBA from the Narsee Monjee Institute of Management Studies (NMIMS) but he dropped out of it later and went on to start various start-ups and businesses and worked as an advisor to businesses like Bennett Coleman & Co Limited, Y Combinator, and Sequoia Capital India. He also held the position of Chairman of the Internet and Mobile Association of India from 2015-2017.

Apart from this, Kunal Shah is an active angel investor, advisor, and mentor for many well-known start-ups in Asia including names like Unacademy, Razorpay, Go-Jek, and Zilingo among others. In 2009, Kunal Shah established Paisa back, a cashback & rewards promotional website essentially for organized retailers. Later he closed the platform to launch a new start-up Freecharge along with his co-founder Sandeep Tandon in the year 2015 which was later acquired by Snapdeal though it continued to run independently under his leadership.

He made his exit from the Freecharge platform finally in Oct 2016 after the same got acquired by Axis Bank in July 2017. It was in the year 2018, he started his new start-up CRED.

5. CRED- Business Model & Key Offerings

Cred business primarily runs on a B2C and D2C model and recognizes itself as a fin-tech start-up. Cred platform allows businesses to list themselves on the platform to offer a wide variety of discounts & offers on their products to the 7.5 million+ users on the platform to boost their sales in exchange for their listing fee.

For its users, the Cred app applies AI technology to track each of their activities such as Credit Card Payment journey, due date reminders, spend patterns, other card usage statistics, etc. Typically, the cred app focuses on affluent, wealthy, and loyal credit card owners with a good credit score.

Here are the primary offerings of Cred for its users-

• CRED Platform– The D2C platform used Razorpay and Visa for credit bill payments and rewards them with Cred coins which could be redeemed for shopping on multiple brands on the CRED Store.
• CRED Mint – Cred Mint is a peer-to-peer lending platform that was launched in Aug 2021 in association with RBI-licensed NBFC Liquiloans. The platform allows its users to lend their money to borrowers for a sum anywhere between 1L-10L for a pre-determined period and earn an interest up to 9 percent per annum as compared to traditional saving accounts and deposits.
• CRED Stash-Cred Stash is an instant credit line that offers credit facilities up to Rs. 5L to its customers at an interest rate that is equal to one-third of typical charges that is fair and transparently displayed on the Cred Stash platform with no subscription or registration fees.
• CRED RentPay– Like credit card payments, Cred store allows its users to pay their monthly rents through the app and even gives rent payment reminders. Payment of Rent through Cred also allows users to get Cred coins that could be redeemed for availing exclusive offers. Not only this, payment of rent to the bank account of the landlord through a credit card allows the user an interest-free credit period with a small transaction fee of around 1-1.5% of the rent amount.
• CRED Travel Store- Cred Travel store also allows its users to use Cred Coins to be redeemed for offers on travel & hotel bookings and other travel products. Apart from these, CRED also offers ‘Travel now and pay later’ facilities to its premium customers having a good credit scores.

6. CRED –Growth & Revenues

Since its launch, CRED has achieved steady growth and popularity among customers and is known as India’s most credit-worthy individuals to pay their credit card bills and earn points. Starting as a credit bill payments facilitator it has expanded to other business segments such as lending, e-commerce payments, advertising for brands, and providing short-term credit via Buy Now Pay Later (BNPL) facilities. According to Kunal Shah, Founder & CEO, Cred controls around 22% of all credit card payments in India every month.

In 2020, CRED was signed as the official sponsor for IPL cricket matches alongside businesses like Tata Motors and Unacademy for a three years deal. As per a Techstory article, this has benefitted it in terms of a 6-7 times increase in the consumer base as well as on receiving its funding due to the massive following of cricket tournament.

After closing a series D funding round for a sum of up $215 million in April 2021, the start-up entered the unicorn club with a valuation of $1.1 billion, and after raising a $200 million funding round in 2022, the valuation stands around $6.5 billion as of 2022 making it one of the highly valued fintech unicorns in the country.

The e-commerce platform CRED Store offered by Cred is a shopping haven for its customers with more than 500 hundred premium brands listed on the platform. As of April 2022, CRED has also launched its utility bill payments segment that will help users to pay their utility bills and facilitate mobile payments recharges & DTH payments on the Cred app.

Next, CRED launched its online e-commerce platform which is exclusively available to its registered users in 2020. In less than 24 months, the store has grown to on board more than 600+ Indian D2C and global brands, with a selection of over 5,000 products. Presently, CRED has around 8M+ customers who have access to the Cred store and can make purchases using CRED coins earned through credit card payments or direct cash.

Revenue Model

CRED application is free to use for its members as the business is focused on scaling & expansion rather than just profit-making. However, CRED has enormous potential in terms of revenue generation. Some of the current sources of generating revenues for the business include-

• Affiliate Income

CRED has partnered with various businesses that offer their products or services to the users on the Discover platform. This allows users greater options to pick from a variety of products while redeeming their CRED coins. On the other hand, businesses can get more visibility, more customer traction, and better sales through the platform. Thus, businesses have to pay a listing fee as well as a certain fee for sending business to them through the platform, which accounts for their greatest source of income.

• Revenue from Advertisement

CRED targets wealthy& affluent customers who use credit cards frequently and thereby holds reliable data for their purchasing and spending patterns, which helps CRED as well as other businesses to optimize its advertisements, encourage more spending, and offer other products like credit cards and loan facilities. Thus, banks and financial institutions pay CRED to access such data.

• Transaction Fees

CRED charges a transaction processing fee of around 1-1.5% of the transactions made through the platform which counts for yet another source of revenue for the business.

• Revenue From Credit Facilities offered

CRED Mint platform offers depositors an interest of 9% interest while borrowers are offered loans at an interest rate of around 10-12%, so the difference between these interest rates accounts for business revenue. Furthermore, the CRED Stash Platform offers an instant credit facility to its customers at an interest rate much lesser than charged by credit card businesses.

7. CRED Financials, Expenses & Revenues

CRED Finances Breakdown

As it is clear from above, CRED managed to achieve a whopping 170 times growth in its business growth as compared to last fiscal year by ramping up to Rs 88.6 cr in FY21from Rs 52 lakhs in FY20. Apart from the operating revenue from other sources, the start-up also generated non-operating revenue from its financial assets worth Rs 7 crores. However, in the same fiscal year, the operating expenses also rose considerably up to 63.3% as compared to last fiscal year. The advertisements and promotional costs turned out to be the largest business cost center accounting for around 52.3% of its operating expense in FY21. Similarly, Employee benefit costs and marketing costs turned out to be the second and third largest cost centers for the same fiscal year. This led to a 45.1 % increase in the business losses to only reach 523.85 cr in FY21 as compared to Rs 379.25 cr in FY20.

Here is a comparison chart with highlights of costs of Cred revenues and expenses in these two fiscal years-

8. CRED- Funding, Investors & Acquisitions

CRED has raised a total sum of $ 1 billion over ten funding rounds. Currently, the start-up is in the early growth stage and is even backed by some well-known venture capitalist firms from all over the world. The last tranche of investment came from a Series F funding round from its lead investors GIC along with four other investors namely Tiger Global, Sofina Ventures, Alpha Wave Ventures, and DF International on June 9, 2022, in which CRED was able to collect $140 million in funding in total making the business to reach a whopping valuation of $6.5 B. It is funded in total by 33 investors with the recent ones being Dragoneer Investment Group and Tiger Global Management. The business valuation of CREDhas ramped up more than 60% from $4.01B in October 2021 to $6.4 B as of June 2022.

Before this, CRED saw its Series E funding round in October 2021 where the fin-tech unicorn was able to raise a funding of around $251 million which was co-led by its existing investors namely Tiger Global and Falcon EdgeDST Global, Insight Partners, Coatue, Sofina, RTP, and Dragoneer and Marshall Wace and Steadfast Venture Capital.

Acquisitions

To date, CRED has successfully acquired two businesses namely- Hipbar, a Chennai-based liquor delivery platform that was acquired on Oct 21, 2021, and secondly Happay, a Bangalore-based corporate costs management platform for a sum of around $150M which is in a mixture of cash and stock.

CRED is further looking forward to acquiring other businesses in this fiscal year. To start with, CRED is reportedly acquiring Noida-based dining and restaurant tech solutions platform, Dineout, and an alternate investment platform, Wint Wealth as of Nov 19, 2021, which has reportedly cost around$25-50M for Dineout whereas around $50M for Wint wealth.

For expanding its lending business, CRED has also reportedly acquired an NBFC namely Parfait Finance & Investment through New tap Technologies after receiving approval from the Reserve Bank of India (RBI) in Nov 2021.

9. CRED-Key Marketing Strategies

CRED has several different marketing strategies. But each of them has two things –Uniqueness and the ability to create brand recall value. Provided below are the highlights of the CRED marketing strategies-

i) Content Marketing– Since the primary aim of CRED is to make people financially literate and trustworthy credit holders. Accordingly, it publishes blogs related to Credit cards, General finance, and Fintech for its users on the website.

ii) IPL Sponsorship– Everybody understands the massive following of IPL cricket matches in India. For better visibility & user acquisition, CRED was an associate sponsor for three IPL seasons during which it organized social media contests, marketing campaigns, and advertisements.

iii) Sending Cakes to Members – In 2019, CRED adopted an interesting business strategy to attract new customers through existing ones by sending those cakes as credit card bill reminders or as a reward for paying bills.

iv) Multiple Advertising Campaigns-Under this strategy, CRED released targeted advertising commercials in which the celebrities were portrayed in extremely absolute abnormal behaviors. The campaign revolved around celebrities like Javagal Srinath, Venkatesh Prasad, Saba Karim, Maninder Singh, and Rahul Dravid and artists like Jackie Shroff and Kumar Sanu. Soon social media memes started flowing allowing an even greater level of engagement and the campaign was widely appreciated.

v) Strategic Partnerships& Tie-Ups-CRED has partnerships with 2000+ brands who offer their products at exclusive prices to CRED customers. For better credit lending facilities, Cred has entered tie-ups with 34 banks and NBFCs, which includes names such as-

• CRED Stash offers an instant credit facility to users at cheap interest rates which are facilitated through CRED’s partnership with the IDFC bank.
• CRED Mint, a P2P lending vertical is facilitated in collaboration with Liquiloans, an NBFC registered with RBI.
• For facilitating payments on the platform, CRED has partnered with Axis Bank and facilitates UPI through the Payments Service Provider (PSP) bank with the National Payments Corporation of India (NPCI) for UPI
• CRED launched Cred Pay in association with Razorpay which helps the users to make payments using their CRED coins with a seamless checkout facility.

10. CRED – Key Competitors

• Paytm,
• PhonePe,
• Google Pay,
• Amazon Pay,
• Freecharge and
• MobiKwik

11. CRED- Future Plans

CRED is a social enterprise that is passionate about ensuring people’s happiness through the use of advanced technologies to bring financial inclusion to people who need it the most. In the last three years, CRED has built a brand and a large customer base, and now it plans to foray into e-commerce and lending segments to open up its paths to organic monetization.

Now, CRED intends to add more services to its offerings to boost its revenues, expand its business and monetize through the platform. For which it is heavily investing in acquiring businesses in wealth management and insurance industry. It is reportedly in early negotiations to acquire a majority stake in a Bengaluru-based startup Small case, which is a platform that enables the new generation of Indian investors to participate in the stock market. Further, it also intends to grow its business globally through expansion in the future.

Kunal shah explained in an interview with Times Now “CRED is going to become is a large gated community or club for selected top 20-30 million families and likeminded people who will are creditworthy people and will create interesting user experiences. And once such a community is created CRED will eliminate the line between fintech and lifestyle and serve their requirements.

Kunal Shah-founded CRED is also working to enhance its user experience and better engage with its customers by making its foray into video commerce and group buying as part of its e-commerce offering under the CRED Store. According to a report “Cred is working towards building products with features that have been primarily aimed to improve user engagement and thereby enhance screen time, retention and ultimately transactions”.

Further, CRED has also announced zero seller commission on the CRED Store under which it will waive listing fees for onboarding and commissions from sales for all its brand partners, but will continue to charge a payment gateway cost on the platform which will be around 2.1% of the product selling price. According to a CRED spokesperson “The zero commission store is a first step towards enhancing discovery and shopping experience for the users on the platform while engaging with brand partners and shoppers in a better way”.