written by | February 26, 2022

What is CRED Business Model and Why is it popular?

People tend to use credit lines and cards when their immediate capital does not support spending on their buying decisions. The easy availability of credit cards to people who have good credit scores makes use of credit cards widespread. The credit concept is not new and is even included in the name of the CRED app. Credit cards are a great alternative to cash There are many credit cards that make rewarding offers to users who settle their payments on time. Some of these include a cash back or travel miles. There are others that give you some additional protection to the purchases you make. 

Hence CRED was born to provide a unique CRED business model platform that enables payments of the credit cards on time and on a priority basis. Besides every time you do so, you earn rewards, discounts, and offers that can be redeemed when shopping on the app. 

Did You Know between Oct and Dec 2021, CRED net worth was 4.01 billion USD?

Everything about CRED

Do you love shopping with your credit card and wish to get the best deals? Well, CRED is an app you should download and try out. Last year, CRED acquired HipBar, a Chennai-based liquor purchase and delivery company. This was an initiative to enter the wallet payments industry with the HipBar-owned prepaid payment instrument license. This marked CRED’s foray into the Pockets Funds Enterprise with the pay as you go fee instrument license which was owned by HipBar.

Kunal Shah - Founder & CEO of CRED: 

The CEO and Founder of CRED is Mumbai-born, Kunal Shah He finished his graduation from Wilson College and pursued an MBA at NMIMS (Narsee Monjee Institute of Management Studies) when the entrepreneurial bug bit him. 

His first venture was PaisaBack with Sandeep Tandon. This provided offers, cashback, and coupons on purchases made by users.  In 2010, the duo wound up PaisaBack and started FreeCharge which SnapDeal acquired in 2015 April. In 2016, he quit FreeCharge which was acquired by Axis Bank in 2017 July. He started CRED in 2018 April. 

Also read: Most Profitable Manufacturing Business to Start in India

CRED is also in the spotlight for being a unicorn. It joined the elite unicorn club in 2020. That is, it became an Indian startup that in business terms crossed the 1 billion dollar USD valuation in a short span of two years. CRED is a first in monetizing credit card timely payments. Its funding partners Falcon Edge Capital and Tiger Global are renowned investors who saw it fit to invest 251 million USD. CRED’s Series-E round of funding has other financial investors too, like the London-based Marshall Wace, DST Global, Steadfast Venture Capital, Insight Partners, Sofina, Coatue Management LLP, Dragoneer, and RTP. As of 19th October 2021 at the end of the eight funding round called Series-E, CRED’s net worth was 4.01 billion USD with 722.2 million USD in capital raised through funding. 

CRED-Where money transactions are rewarded

CRED provides exclusive offers, rewards, and discounts to users who make online payments with their credit cards on its app. It has house rent payment options and the Cred Mint service which permits lenders to use idle money i.e. cash in their hands at 9% per annum as short-term lines of credit, to borrowers on its platform. 

The business model of CRED: 

CRED’s tagline is ' Bharosa Aur Suraksha Dono' meaning trust and safety. This listing and payments app is a Bengaluru-based Fintech platform.  Kunal Shah founded CRED in 2018, and as of 2021 October, it is worth USD 4.01 billion with a revenue of USD 69,806 of which ₹.52 lakh is for October. Its website is cred.club and its total funding so far is 722.2 million USD. The multiple-armed CRED business model is explained below.

How CRED makes money from the app: Cred app is an app, where users can sign up and choose to pay their credit card bills to earn CRED coins that can be redeemed as discounted experiences, offers, shopping products, coupons, and more. The app displays all services that can be availed like CRED Pay, CRED Store, CRED Stash, CRED RentPay, etc.

Also read: Handy Tips For Creating A Successful Art Business | MyDukaan Blog

How does CRED make money from listed businesses? 

Businesses listed on the app on its CRED Store make a wide variety of discounted, thrifty and exclusive offers to CRED users. The businesses pay a listing fee and benefit from the ready business of CRED’s over 7.5 million customers. CRED uses your payments data to suggest offers that may interest you thereby creating a database of customers and businesses for shopping on the app. This information is shared by CRED for a fee.

Credit Card bill payment users: The D2C platform uses RazorPay and Visa for payments and rewards the credit card payments of users with CRED coins that can be redeemed by shopping on the CRED Store. 

Cred Mint lending platform: Cred Mint is the platform that is peer-to-peer and was introduced in 2021 August. Lenders with short-term spare funds can lend their money for interest on it. They can also withdraw their amounts with interest earned whenever needed.

Easy loans on CRED Stash: The CRED platform allows a credit-score linked online personal line of credit to its users where the subscription and registration fees are NIL! Of course, nominal bank interest is charged on the amounts used and this is transparently displayed on the loan page of the app.

Rent payments on CRED RentPay: The user can make rent payments to the landlord’s bank account and the use of the credit card earns the user an interest-free period to repay the amount at a small transaction fee of 1-1.5% of the rent.

Travel discounts on CRED Travel Store: The user can use the travel store for discounted stays, staycations, hotels, travel products, and vacations. CRED also offers ‘Travel now and pay later’ facilities to its premium customers with a good credit score. 

CRED revenue model and its sources:

The earnings of the CRED business model are mainly from businesses that pay listing fees to display their offers and products. CRED coins are used to redeem the rewards offered at spas, fashion stores; Amazon’s gifting cards, etc. And when these coins are used the listed businesses pay a fee to CRED for directing the customer to them. CRED also uses your data to suggest offers that may interest you thereby creating a database of customers shopping on the app. The financial collated information of CRED’s customers is shared with financial institutions, banks, credit card companies, etc, in its revenue model for a fee.

How does CRED make money? 

CRED has multiple sources of revenue. The various services and features that generate its revenues are as follows:

  • Credit Card Payments using CRED Pay are possible for companies who establish a direct-to-consumer D2C experience using Visa and Razorpay. 
  • Rent payments are enabled on CRED’s RentPay service using credit cards. The user can make rent payments to the landlord’s bank account and use of the credit card earns the user an interest-free period to repay the amount at a small transaction fee of 1-1.5% of the rent.
  • Shopping at the CRED Store is a joy as the store offers a thrifty variety of experiences and products to users who pay their credit card bills on this platform. Each payment earns CRED coins that can be redeemed through shopping at the CRED Store.
  • Avail easy credit loans on CRED Stash the digital lending platform. CRED allows a credit score linked online personal line of credit to its users where the subscription and registration fees are NIL! Of course, nominal bank interest is charged on the amounts used and this is transparently displayed on the loan page of the app.

How to use the CRED app?

The following steps will help you understand how to access the CRED app.

  • Download the app from IOS, Apple or Google Play Store.
  • Next, enter details of your credit cards and the telephone number associated with the cards.
  • One of the essential conditions of the business model for earning rewards on the CRED app is that your CIBIL credit score needs to be in the 750 to 900 range.
  • Those applicants whose scores are less than the credit score cut-off of 750 points are put on a wait-list as per company policies.
  • You should then configure the type of payments and your mobile number to make the credit card payments from.

Also read: How to Start An Online Saree Business from Home

  • CRED app can be used conveniently and safely as a single app to make all your credit card transactions and bill payments.
  • You will need to allow the CRED app to access your mail ID, so it can scan and read your credit card bills, due dates, receipts, services used statements, and such to execute and schedule your credit card payments efficiently.
  • Each successful bill payment of your credit cards earns CRED coins which can be redeemed as discounts on various experiences and products from CRED partners on the CRED Store.
  • The app is very useful as it automatically analyzes the miscellaneous costs, overall expenses, loan limits, due dates, etc, to ensure you stay within your loan limits, due payment dates and avoid unnecessary penalties and late or extra charges.
  • The safety features of the CRED app allow it to securely read your email for card statements, and provide you with smart CREDit statements for your monthly scheduling and payment activities.
  • The CRED app is also certified as safe to use by RBI or the Reserve Bank of India which monitors the app and CRED can proudly claim that so far there have been no reported breaches of its security.

Conclusion: 

This article gives you an insight into the uniqueness of the CRED App and how it helps you to monetize your credit card payments on a consistent basis. Its wide array of services, how CRED earns money, and its dynamic founder Kunal Shah, are the secrets behind its success in turning into a ‘unicorn startup’ in 2020, just 2 years after its app was launched. 

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What is the precondition to be onboarded on the CRED app?

Ans:

The CRED app precondition has a minimum credit score of 750 meaning that its customers are premium customers and spend using credit cards. The platform is a money-spinner that incentivizes and monetizes payment of credit cards on its app. It also offers rewards in CRED coins, wallet payments, and a wide variety of products and travel experiences.

Q: Is CRED a secure app?

Ans:

Yes, CRED is RBI-approved and monitored and is hence an app that is safe and simple to use.

Q: Is the CRED app free of charge?

Ans:

No. Most services available at registration and subscription to the app are totally free of charge. However, payments like CRED Rentpay, CRED Travel Store, CRED Stash etc have transactional fees and their loans have an interest rate of 9% pa.

Q: Is the CRED business model funded privately?

Ans:

Yes. The CRED business model has won over several large investors like Falcon Edge, Coatue Management, Tiger Global, London-based Marshall Wace, DST Global, Steadfast Venture Capital, Insight Partners, Sofina, Dragoneer, and RTP. As of 19th October 2021 at the end of the eight funding round called Series-E, CRED’s net worth was 4.01 billion USD with 722.2 million USD in capital raised through funding.

Q: Why did people initially not believe in the CRED app?

Ans:

Traditionally, Indians and people do not trust a company or platform like CRED that offers its services and rewards for free. However, CRED turned into a startup unicorn in just 2 years, based on its multiple revenue sources, and a sound business model.

Q: How does CRED earn its profits?

Ans:

 An oft-asked question is ‘how do CRED earn money’. CRED has multiple earning sources from its varied app features like its listed business fees, transaction fees on credit card payments, rent payments, travel deals, and more. 

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.