CRED Revenue Model – Most credit card users struggle with managing several cards, paying bills on time, and paying down balances via laborious procedures. CRED, a finance firm, offers a one-stop solution to all of these issues by making the procedure incredibly straightforward and website provides.

CRED has rapidly grown into a startup unicorn with a $2.2 billion value because to its massive customer base of over 6 million members.

Could a business be established that only caters to the wealthy and cream of society, explicitly excluding the 3% of Indians who use credit cards? How does it even manage to reward its consumers while continuing to expand and become one of the unicorn startups with the quickest rate of success?

Startup Story Of CRED

The aim was uncomplicated. The goal was to provide a framework for improving and organising financial life. Kunal Shah wished to grant those with high credit ratings extra privileges and advantages. Therefore, creating the flywheel effect was crucial to helping more people raise their credit scores.

Everyone, from businesses to the government, has been concentrating on the people. Those individuals, responsible citizens who pay taxes on time, were the company’s founders’ primary target market. They believed that no one had ever resolved their issues.

Therefore, the main reason CRED was created was to help taxpayers with their problems while also rewarding them with lucrative rewards.

Who is the CRED Target Customers?

Targeting a sizable number of rich, prosperous, and dependable clients who possess and use credit cards is CRED’s goal. As a result, a safe group of dependable people are formed, and these people can later contribute to and extend to a wide range of new possibilities.

The business seeks out clients with good credit, defined as a score of at least 750. Those who do not have a decent credit score must wait before making recommendations to raise it.

CRED’s Value Proposition

Popular for its outstanding user experience, CRED’s business strategy stands out by giving its clients the following benefits:

• With only five taps, you may pay your rent, credit card payments, and other expenses all at once. By making the procedure incredibly straightforward, fast, and convenient, it lessens the hassle of managing many credit cards.
• Instant credit lines are made available to users through CRED, and lenders may take advantage of P2P lending with ease at a 9% interest rate that is often greater than that of savings accounts and deposits.
• It keeps track of loan caps, analyses users’ overall spending and hidden costs, tracks payment deadlines, and notifies them in time of upcoming reminders to make payments.
• Users that pay on time are rewarded with CRED coins, which they may spend on the ‘Discover’ platform to get discounts on a variety of goods provided by CRED partners.
• Most significantly, CRED is a small network of creditworthy people with a high level of credibility. It functions similarly to a regular customer system where everyone pays and plays together. As a result, a social network is created with enormous potential for linking people to a variety of different opportunities.In order to maintain a positive credit profile and make wise financial decisions, users may also compute their credit score for free using CREDs.

How does CRED make money?

We’ll talk about CRED’s main operational model before moving on to the revenue portion. What are the ways CRED carries out its duties? And how can audiences become customers? Therefore, let’s begin:

The business model of CRED

• You must download CRED on your smartphone, register, and utilise the phone number associated with your credit card. Congratulations if your credit score is discovered to be higher than 750! You are permitted to access this premium software!

(A person’s creditworthiness is essentially represented by their credit score, which is based on credit records. To determine whether the user repays his debts, has a sufficient balance, etc., it digs into his past. You will be placed on the waiting list if your credit score is less than 750.

You may manage your credit card range with CRED from a single site.

• Through this app, CRED’s users are able to pay all of their bills, including their rent. In exchange for these payments, CRED gives the users CRED coins, each of which is worth one rupee.
• You may obtain or redeem a variety of benefits or discounts using CRED coins for a variety of uses.Even some companies, such IXIGO and Freshmenu, have cooperated with CRED. You may use your reward or discount to purchase any product or service from these partners by redeeming your reward.
• CRED offers a sophisticated analysis system that maintains records of all expenditures, from total costs and record loan caps to hidden costs. It warns you of all these things to save you from paying through the nose.
• To read and scan the receipts, including the due dates, CRED has full access to the mail identity of its users. To avoid late fees, CRED requests that consumers pay their bills at least two days beforehand.

With the aid of the CRED’s three primary pillars, let’s comprehend its operational model:

Three pillars of CRED-

1. CRED customers-

Many people use various apps or by going directly to their accounts to complete the laborious process of paying credit card bills. By having just one app on your phone, CRED offers a comparative advantage in terms of paying all of your bills. As CRED sends you notifications to remind you of your bills, you can’t forget to pay them. Additionally, every time you make a payment using the app, you receive rewards in the form of CRED coins.

2. CRED application-

You may view all of the options that are offered on the app for paying your credit card account. After you pay it, you receive credit card coins, each of which is worth RS 1. These coins can be redeemed for the deals and discounts that are now available.

3. Partnership with businesses

CRED establishes connections with numerous companies. Since all different types of customers use it, it gives both large and small businesses an equal level of visibility.We’ve now had enough time to talk about the CRED working model. Let’s go to the income section now. How does CRED generate revenue?

The revenue model of CRED- How does CRED makes money?

It should be highlighted that the business is hardly making any money. Cred had a total income of 52 lakhs this the current year but a loss of 360 crore. Cred has a variety of revenue streams, including:

Advertisement:

On its display, the business promotes the goods and deals of various brands. These advertisements come with a price tag from CRED. Obviously, there is a cost associated with advertising.

CRED coins:

Do you recall receiving CRED coins for each payment you made? You may access a variety of discounts, deals, and goods from a wide range of companies using those coins. Some of them consist of spas, Amazon gift cards, etc. Therefore, CRED gets paid every time a user redeems CRED coins for an offer!

Loans:

They recently began disbursing loans up to Rs. 5 lakhs in a matter of clicks, paying little attention to the borrower’s past. They work with IDFC banks on this in exchange for a commission.

Data:

CRED takes advantage of this possibility by using the complete set of your financial information. It employs it to deliver better outcomes to you. Some businesses are constantly looking for reliable clients. Only by paying the CRED do they have access to these banks, credit card companies, and financial data.As you are all aware, CRED’s revenue falls short of expectations. You must be aware that the sources are dispersed as well! There is no one method to succeed financially. To get to know them:

1. CRED Pay-Visa and Razorpay collaborated to launch this application. The D2C channel offers the option of fast payment with CRED pay.
2. CRED Rentpay-Users of this app can use it to pay their rent. The money is deposited right into the landlord’s account. According to the network, CRED levies a transaction fee of 1–1.5%. The consumer may benefit from an interest-free credit period and the rewards programme, which is the nicest part of this.
3. CRED store-Only authorised CRED users are permitted to use the CRED shop. These unique items may be accessed using the CRED coins that customers receive every time they make a payment using their CRED.

Why are investors investing in a startup earning ‘Zero revenue’?

So, the question is: why are the investors still investing in this app if it is experiencing enormous losses and generating little to no revenue? Why would someone invest in a firm that is functioning so poorly?

Because they are concentrating on long-term plans, CRED and its investors are eager to build a user-based platform. Yet how?

Important Data:

All of the important client data belongs to CRED. It is able to give these data to large corporations. These businesses target their consumers based on their spending and financial behaviour using the data. And CRED can make a tonne of money by selling this data.

Expansion:

The number of credit card users in India is very low. In sharp contrast to the US, where one individual has four credit cards for every twenty people, this country has just one credit card per twenty people. They therefore have the chance to grow their business to international nations, which will undoubtedly increase their earnings.

Financial services:

The creator has stated that in order to offer financial services, partnerships would be made with banks. They’ve already begun since they’ve begun extending loans in conjunction with IDFC banks. Additionally, he stated that they might create their own credit cards.

FAQ – CRED Revenue Model