CRED is an Indian fintech company founded in 2018 by Kunal Shah, who was motivated to create the platform to solve the trust issues he believed were present in Indian finance. Shah wanted a create an ecosystem where credible individuals could connect and where lenders and other financial institutions could lend money to trustworthy borrowers. The CRED app allows consumers to meet multiple credit card repayments on time and earn points to spend on exclusive offers in return. In April 2021, the company became one of the fastest startups to achieve unicorn status with a valuation of $2.2 billion.
CRED now controls 22% of all credit card transactions in India, with various other features added in recent years such as P2P lending, eCommerce, and the ability to pay other recurring household expenses such as rent and utilities.
CRED business model
CRED’s business model is based on three key pillars:
- Customers – who pay their credit card and other bills using a single interface that is more intuitive and rewarding than paying through their bank accounts. Customers must have a credit score of at least 750 which increases the likelihood bill payments will be made on time.
- The app – which provides the interface where bills can be settled and CRED coins can be earned and redeemed. The app is renowned for its elegant UI and UX design with a 4.7 rating in the Google Play Store. One unique feature of the app is that it awards coins based on the total amount of the bill that was paid.
- Businesses – who provide customers with offers in exchange for increased visibility among their respective target audiences. Businesses also compensate CRED to display their offers inside the app.
Customer value proposition
The company offers several value propositions to consumers who download the seamless and stylish app. They must first sign-up by providing their details and all the credit cards they wish to manage linked to a cell phone number.
As touched on earlier, there are several useful features within the app in addition to credit card payments. These include:
- CRED Stash – a low-interest line of credit for short-term borrowers that is backed by IDFC First Bank in India.
- CRED Store – where customers can spend their CRED coins on over 2000 brands including Tata, Puma, and Samsung.
- CRED RentPay – where customers can transfer their rent direct to the landlord’s bank account using a credit card.
- CRED Mint – a P2P lending facility that matches lenders with extra funds with borrowers who are short of funds.
How does CRED make money?
CRED makes money in a few primary ways.
The first is listing fees that it collects from partner brands who list their products and services inside the app. This listing fee is not unlike the fee eCommerce sites such as Amazon charge merchants to display their products.
Whenever a user redeems their points for such an offer, CRED also collects a commission from the business concerned. The company also takes a small commission for every successful loan that it facilitates as part of the Cred Stash
Furthermore, as part of the CRED RentPay functionality, the company collects around 1 to 1.5% of the total transaction amount.
CRED also collects extensive data on its users as they pay bills and otherwise interact with the platform. The company then sells this information to financial institutions that use it to create better credit card and loan products.
- CRED is an Indian fintech company founded in 2018 by Kunal Shah, who created the platform to solve the trust issues he believed were present in Indian consumer finance.
- CRED’s business model is based on the three key pillars of the customer, app, and business. Customers are vetted for creditworthiness during the application process, which increases the likelihood that bills will be paid on time and that coins will be earned to redeem on partner offers.
- CRED makes money via listing fees that it charges businesses in exchange for listing their products and services. It also collects a commission from every loan it facilitates and a separate commission from brands whenever a customer redeems an offer.
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