CRED
In this episode we talk about CRED (https://www.cred.club/) app and recent talk news.
Overview
CRED is a fintech startup founded in 2018 in Bangalore, India by Kunal Shah. Their main business idea is around helping customers benefit by earning reward points on making credit card payments through the CRED app.
Funding
Seed round was from Sequoia India, Ribbit and RTP global. They are currently in series B with raising $4M in the latest round as of this writing.
Business model
Based on publicly available information, their business model is around providing customer a platform to earn points whenever they make payments towards their credit points through their app. To start with, they provide only certain subset of credit card customers who have a CIBIL credit score beyond a certain number. This might be to ensure the customer form a good credit score club so that the earning points are offered from exclusive companies. Their income stream might by following ways:
- Since the customers using the CRED score maintain a decent credit score, the points offering companies have exclusive access to responsive financial customers. Hence CRED can act as a market place for retail / e-commerce companies with access to higher buying customers. CRED charges these companies to allow access to the point earning customers.
- If the credit card payment due date is 3-4 days away, maybe CRED pools payments made by customers in to a fund and is kept in an interest earning account for the 3-4 days before paying their respective due dates.
- Eventually when the companies offering points are large in the CRED platform and the volume of customer using the app is also high, maybe they have plans to add service charge for end customers to pay through the app. Although this sounds bad to end customers since they can pay directly to the credit card company directly.
Competitors
As of this writing, we don’t see a similar credit card payments based competitor in the Indian market. This when viewed through the US market seems like a combination of Mint, Credit Karma, Groupon and Chase Sapphire combined into one app.
Our thoughts
As a customer, if I can pay credit card bills and earn points along the way, I wouldn’t see a reason why someone would not want to sign up. Unless they plan on introducing charge costs for customers to balance the financial balance sheet, customers don’t see any reason to not sign up.