CRED Business Model | How Does CRED Make Money?

CRED is India’s first platform to automate the payment of credit card bills. Kunal Shah, Freecharge’s former founder, created CRED in April 2018. 

Kunal Shah founded CRED to establish an exclusive society comprised of India’s most trustworthy individuals. 

CRED allows you to manage and settle all of your credit card balances. It provides us with exclusive discounts on our credit cards and also keeps track of our spending.

CRED was inducted into the Unicorn Club in April 2021 at a $2.2 billion valuation, backed by a $215 million funding round headed by Falcon Edge Capital and Coatue Management LLP. 

CRED business model has proven remarkable when achieving this level of success in less than two and a half years.

The increasing use of credit cards has led to a higher requirement to maintain them. CRED seized the opportunity and entered the arena. 

CRED is a platform that rewards consumers with cred coins when they use CRED to pay their bills. It enables users to earn exclusive incentives that can be redeemed for immediate purchases through the CRED application.

What is CRED?

CRED is one of the best applications on the app store because it rewards users for paying their bills via the app with a few simple clicks.

It is quite simple to use. The CRED app features an elegant UI and UX design.

Users register on the app and can view all available credit card bill payment possibilities. Numerous consumers already utilize CRED applications and pay their credit card bills using payment apps or straight through their bank.

The user who pays their bills on time will earn CRED Coins for redeeming them for prizes.

Cred is a platform that alleviates the bother of managing several credit cards and assists in making on-time credit card payments. 

Additionally, customers who make timely payments through the CRED app earn points that may be used for rewards from the app’s partners.

CRED is one of the top applications on the app store since it rewards you for using the app to pay your expenses.

The program is really simple to use and features an attractive user interface. If you use a credit card regularly and pay your bills using another app, you can earn amazing benefits with CRED. These benefits range from free stuff to cashback.

Company NameCRED 
Company TypePrivate
FoundersKunal Shah
ProductCRED
OwnerCRED Pvt. Ltd
Founded Date2018
HeadquarterBengaluru, India
Location ServedIndia
Websitehttps://cred.club/

How Does CRED Work?

CRED provides offers in collaboration with enterprises. Businesses gain exposure and traction on a platform where consumers are already spending.

CRED receives additional offers for display on their application in exchange.

This provides additional incentives for visitors to join and pay their bills using the app.

CRED enables you to alleviate the stress associated with managing several credit cards and assist you in making timely credit card payments. 

The CRED program allows users to accumulate points for instant redemption. Kunal Shah sold Freecharge in 2015 and sought a new concept that could impact people’s lives.

He discovered that while there are numerous automatic products in developed countries, such as supermarkets without cashiers and gas stations without attendants, there is no such reputable mechanism that will allow people to pay their credit card bills fully and on time without incurring any additional fees. 

CRED Business Model

CRED was launched in April 2018 to attract consumers. It is optimal for creditworthy individuals. 

However, the question arose as to why consumers should pay their credit card bills via their APP, and thus the idea was born to reward loyal credit card users who paid their bills on time.

You will need to download the CRED App and provide your cell phone number. When a new account is set up, the app examines the cards associated with the phone number. 

An individual with a credit score of at least 750 would be eligible to use this unique app. Otherwise, they will be queued up. 

CRED apps will scan credit card receipts, such as service statements and due dates when given access.

CRED Business Model

CRED’s business model is centered on rewarding consumers for using the internet platform to pay their credit card bills. 

The application uses AI (Artificial Intelligence) algorithms to track every transaction, including the Credit Card Payment trip, due date reminders, spending patterns, and other card usage statistics.

Only users with a Credit Score greater than a specified minimum are permitted to access the application.

Kunal Shah, the founder of CRED, has kept the company’s operations as simple as possible. 

The rapidly expanding startup operates by working with service providers who require increased traffic to their website. 

Providers pay a nominal fee to the company in exchange for their listing on the CRED app’s “Discover” feature (more on this in a bit).

When you pay your credit card bills on time with the app, you earn CRED coins that you can use to purchase coupons or special deals from any of the firms with which the fintech giant has partnered. 

Apart from Discover, CRED also provides features such as CRED Stash and RentPay, which are essential functionalities that enable CRED to serve as a one-stop-shop for all your financial needs.

CRED Stash is merely an extra feature that acts as a substitute for LazyPay or SlicePay — it enables customers to obtain a near-instant loan of up to INR 500,000 at an extremely low interest rate.

RentPay is another important function (although only available to a very small percentage of customers). It enables users to submit rental payments to their landlords using linked credit cards.

That is all. That is the CRED business model in a nutshell. And yet, people are astonished that such a simple concept can be so effective. 

And in case you’re wondering how CRED generates money from this, the answer is that it doesn’t. And we’re about to discover why.

How Does CRED Make Money?

CRED does not have a single revenue stream that is optimal. CRED offers diverse products and services, including Rentpay, CRED Stash, CRED Store, Credit Card Payments, and CRED Pay. 

For example, CRED’s Rentpay charges consumers a transaction fee of 1% – 1.5 percent, depending on the credit card network used by the user. 

CRED earns money by charging businesses a fee to list their products and services on the CRED application. Additionally, they anticipate future revenue via a credit-line business model.

Listing Fees

CRED showcases the products and services of businesses that have paid a subscription fee to use the Discover platform. There are offers from fashion retailers, spas, and Amazon, among others.

These deals provide its users with a selection of incentives to choose from. As a result, it garners increased user attention.

Each time a user redeems CRED coins from the app, the business pays CRED a fee for introducing the consumer to the business.

This is CRED’s primary source of revenue at the moment.

User Data

CRED gathers information about you as you pay bills and use the app to provide you with better offers in the future. This is their secondary revenue stream.

Financial institutions are constantly seeking the most viable customers for their credit cards, loans, and other products.

CRED Business Model

CRED users are frequent consumers who are extremely valuable to financial institutions — they are youthful, tech-savvy, and repeat product buyers.

Banks and credit card firms pay CRED to access the data and directly market to these customers.

Cred Stash

In basic terms, it enables you to obtain personal loans using your credit cards.

We used to have to go through a lengthy procedure of submitting several documents and demonstrating collateral to obtain a loan.

Cred transforms a negative experience into a very basic and straightforward process.

Individuals with credit cards earn a solid income and utilize Cred App; we must have a credit score of at least 750.

A person can have a credit score of more than 750 only if he or she has made all past loan payments on time and has not missed any payments.

It enhances the likelihood of loans being repaid on schedule.

Its process is so quick and simple that you will receive the loan money in your bank account within two minutes and will not be required to submit numerous documentation.

CRED has formed partnerships with banks and operates as a go-between for banks and Ideal Candidate to make loans.

Cred charges banks an origination fee of approximately 1% for bringing the top candidates.

Cred Pay

Cred has partnered with”Man Matters” and “The Man Company,” and you may use Cred Pay to purchase their products.

It is referred to as a ‘One-Tap Payment Method.’ Payment is made using a credit card, and you can also use Cred Coins to receive a 10-15% discount.

Cred accomplishes this by utilizing the payment gateway services of Visa and Razorpay.

They will gradually associate with additional brands that will help them grow their revenue in the future.

Rent Pay

You can pay your rent using a credit card through Cred’s Rent Pay function.

Cred levies a transaction fee of between 1% and 1.5 percent for the same.

Cred claims to have handled about 50 crores in rent payments to date; however, based on our calculations, they only earned between Rs.50 lakh and Rs.75 lakh before deducting payment gateway fees.

If you consider that these two revenue streams cannot provide a significant quantity of revenue, you may wonder why they are included in Cred’s feature.

These two features are primarily used to boost user acquisition and engagement on their site.

Partner with brands

Nowadays, many direct-to-consumer firms have joined the market; these enterprises sell directly to consumers via their website or through Amazon or Flipkart.

Generally, their products are of high quality, but they struggle with marketing and finding the correct clientele.

As we all know, Cred users have a high purchasing power and are considered premium users, and Cred assists them in selling their products or services by advertising them on its website.

Cred earns money in two ways.

  • Cred’s E-Commerce Platform, “Discover”: As a Cred user, you’ll learn about new products like “The Man Company,” “MIVI,” and “BLU TOKAI.”
  • Cred earns a commission on each sale made through the brand platform. Cred has also featured numerous well-known companies on this platform, including “One Plus,” “PUMA,” and “OLAY.”

Additionally, you receive a discount when playing several interesting games.

Cred has worked with over 1300 businesses so far, with approximately 200 brands remaining active at any given moment.

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Future Plans of CRED

By examining Cred’s business model and revenue streams, it’s evident that this is insufficient to demonstrate future growth. Thus, the following question arises: What are Cred’s Future Plans?

Numerous multinational corporations wish to establish operations in India due to the country’s large population. Still, Kunal Shah recognized that while India is densely populated, only the top 25 million individuals are intensive purchasers.

Bear in mind that being wealthy alone does not qualify you for this condition, as even the wealthy do not always spend that much.

However, cred now has access to all of its users’ data, enabling it to study the people’s purchasing behavior with the highest purchasing power in India.

Cred is currently focused on distribution and attracting new clients to eventually sell financial goods such as insurance, investment instruments, loans, and some products via its e-commerce platform.

Cred’s creator, ‘Kunal Shah,’ states that the company is a lifestyle company, not a fintech one.

Thus, Cred’s Business Model and somCred’s revenue-generating strategies Cred may pursue in the future.

What is the Funding and Valuation of CRED?

With CRED now valued at $2 billion, it’s critical to understand who is investing in Kunal to lead the country into a more exciting future. 

CRED has raised about USD 256.5 million in five investment rounds and is planning for another in the coming months, thanks to the support of five lead investors and 21 additional funders. 

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DST Capital, Sequoia Capital India, Sofina, and RTP Global are among the prominent players.

With backing from some of the industry’s most powerful players, Kunal Shah’s CRED is clearly on a route to dominance, with no visible opposition insight.

Success Story of CRED

It’s quite simple to point out what CRED did properly in the two years since its founding to rocket to a USD 800 million valuation. 

The Bangalore-based firm has created a strong foundation on effective marketing, a delightful user experience, and compelling deals — a winning combination that every Indian client adores. 

Their entertaining yet instructive skits go so far as to compel you to watch the entire advertisement without pushing skip, which is no easy feat. 

This “fun but also serious” mentality encapsulates the way CRED operates, and it surely derives from its creator, Kunal Shah.

Unless you’ve been living under a rock when it comes to startups, you’ve probably heard of Kunal Shah. His tweets are intricate works of art that frequently drive fans racing over the internet to decipher. 

Unlike the majority of Twitter users, though, the man is not all talk. Kunal is an MBA dropout who has spent the larger part of his career attempting to alleviate the financial pressures faced by the common man.

PaisaBack, a platform akin to CRED that allows businesses to promote campaigns and offer cashback, was one of his first attempts to disrupt the Indian finance market. 

It was acquired by FreeCharge in 2010 and paved the path for another finance startup. Kunal pushed FreeCharge to a commendable level with his colleague Sandeep Tandon before departing the company in 2015 when it was acquired by Snapdeal.

With many experiences to back him up on his fintech adventure, Kunal was prepared to embark on a solo voyage that would ultimately impact the country’s future and how it saw fintech apps. 

He started CRED in 2018. After nearly 36 months, the company is targeting a $2 billion valuation in 2021.

Final Words on CRED Business Model

CRED is one of the fastest-growing organizations in the world today, and it is a force to be reckoned with under the leadership of Kunal Shah. 

The company is young, extremely adaptable to market changes, produces incredible things, and knows how to have fun while doing it. 

Overall, few firms like CRED place such a high premium on customer service, and we believe that many startups will follow suit. 

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The fintech business is beginning to accelerate its growth. Although still in its infancy, CRED’s investments provide a peek of how significant this field will grow over the next decade.

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