Don't Worry! CRED is here.

"CRED: A visionary solution that transformed credit card bill payments, turning neglect into diligence, and rewarding responsible financial behavior."

A Tale of Innovation

Have you ever heard of people intentionally defaulting on small credit card bills? Well, let me take you on a journey where a man's ingenious idea changed the game entirely.

When I was a kid, I once saw a random movie scene playing on the TV. I don't even remember the name of the movie. The important thing is that in that particular scene, a man had 10-15 credit cards and consistently defaulted on his payments, deliberately avoiding paying his bills and hiding from the credit card companies. He did this with all of his cards. The credit card companies even hired local "vasulies" to pursue him and force him to make payments, although they were not authorized to do so, But....... This scenario was common for many credit card holders, although not all of them are engaged in such acts. Additionally, many people would often forget the due dates for their payments, resulting in heavy charges.

The Game-Changing Solution by CRED

After years of struggling with credit card companies, a man, like an angel, came up with an amazing idea that completely reversed the scenario. The individuals who previously neglected their bill payments are now diligently paying them on time and in some cases, even earlier than expected.

So, what miracle did he perform that changed everything?

With the increasing use of technology in a world where people prioritize checking their emails on mobile phones or laptops over traditional media like newspapers, he developed a platform that not only allows you to pay your bills easily but also rewards you for doing so. Isn't that amazing?

By now, you must have guessed his name. Yes, it is Kunal Shah, the founder of CRED—the Man who builds Giant startups for a living. Before CRED, his successful venture was "Freecharge".

Well, this is the beauty of entrepreneurship, where you happen to find a solution to a  real-world problem in which thousands of people are getting affected in one way or the other.

How exactly did he manage to convince people to do something they would never do in the first place, even after constant reminders? The Credit Card bill payment.

"CRED: Where simplicity meets rewards, transforming the way we manage our credit and creating a world where responsible financial behavior is celebrated."

CRED, as a business, primarily focuses on providing a convenient platform for credit card bill payments and managing multiple credit cards simultaneously. It achieves this by creating alerts for payment due dates, offering rewards, and more.

And who would have thought of receiving a reward every time you make a payment on your credit card bills? That's exactly what CRED offers to ensure that users never miss out on making payments again. After all, who doesn't love rewards? CRED introduced a popular reward system called CRED Coins. Users can easily redeem these coins on the CRED website or mobile application and, in return, enjoy exclusive gifts and offers from their favourite premium brands such as TATA CLIQ, Cure FIt, AJIO, Myntra, Dineout, Samsung, Jio Savan, Puma, and Ethos.

These are indeed popular brands that people commonly visit. However, the decision to own a credit card and use CRED is a personal one. It is natural to consider the advantages and potential drawbacks. One concern may be whether CRED is exploitative in any way. Additionally, it is important to note that avoiding default on credit card payments can have a positive impact on your credit score. Maintaining a good credit score makes it easier to obtain loans and other forms of credit.

CRED's Unicorn Status: Valuation and Recognition:-

In April 2021, CRED achieved the status of a unicorn, reaching a valuation of $2.2 billion (roughly 18,139 crores). Currently, CRED is valued at an impressive $6.4 billion, topping the list of the top startups of 2022, as announced by LinkedIn.

What's Unique?

This Fintech platform based in Bengaluru enables users to effortlessly pay their credit card bills (through RazorPay and Visa) while also providing them with convenient management options. When users make bill payments, a specific percentage of their transaction value is typically deducted, and in return, they receive CRED Coins. These coins can be redeemed for discounted experiences, offers, shopping coupons from leading brands, and more.

Recently, it has also entered into Unified Payment Interface (UPI) race along with providing a digital lending platform through ‘Prefr’, which merged with CRED through the acquisition of CreditVidya and Newtap Technologies. It provides P2P lending at a rate of 9% which is significantly higher than what savings accounts and deposits usually offer.

CRED potentially earns compensation from the brands it partners with by driving traffic to their website. With partnerships established with over 2000 brands, it's highly probable that CRED has implemented revenue-generating arrangements through these collaborations.

Other services they provide to its users are CREDIT management, CRED Stash, CRED Mint, RentPay, CRED Store ad CRED travel.

How is CRED doing as a Business?

CRED significantly increased its expenses on marketing and promotion in FY 2021-22, tripling the amount compared to previous years. The company is well-known for its innovative advertising methods. Over 60% of their total expenses, amounting to Rs. 975.8 Crores, are being allocated towards ads as they aim to expand their brand and user base.
(FYI: We couldn't find FY22-23 data in the public domain.)

In the realm of VC-funded startups, it is frequently observed that a significant amount of resources is allocated towards advertising and customer acquisition in order to secure a portion of the market. Consequently, during the initial years, profitability often eludes these ventures until they gain control over these expenditures.

Despite facing losses, CRED managed to achieve an impressive valuation of $6.4 billion within just four years. In FY22, their losses grew by 2.4 times compared to the previous fiscal year, increasing from 524.3 Crores to 1,279.9 Crores. On the other hand, the revenue from operations saw a significant increase of 4.4 times, rising from 88.6 Crores to 524.3 Crores in FY22.

During an interview, Kunal Shah, the founder of CRED, mentioned that their current focus is not on generating profits. Instead, they are prioritizing building the brand and expanding their offerings for the future. However, he expressed confidence that CRED will achieve profitability in the future.

It is always interesting to see what else Kunal Shah, the ex-founder of Freecharge and current founder of CRED, will come up with in the near future.

But…. till then make sure you subscribe to our page and share this article.

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