Cred is a popular fintech company founded by Kunal Shah in 2018. It is a reward-based credit card payments startup. Recently, Cred raised $80 million in its latest funding round at a $6.4 billion valuation. Even after making a loss of Rs 524 crore in FY21 why is this company getting so many investors? Is Cred more than just a credit card payment app?
To find answers to these questions let's see what acquisitions Cred has made in recent times. This will give us a clear idea of the future plans of Cred.
In October 2021, Cred acquired HipBar, an alcohol delivery and payment startup. Cred was interested in this deal because HipBar has a prepaid payment instrument license (PPI).
Now, what is PPI? It is a prepaid payment instrument that allows the payment of goods and services, including fund transfers against the value stored on the prepaid card. RBI has issued this license to only 37 firms in the country.
Using the PPI licence, Cred can issue cash vouchers and prepaid cards and can facilitate digital wallets for the Cred community.
Cred’s holding firm Dreamplug Technologies has held the share capital of Prasanna Natarajan, founder and CEO of HipBar and Rajalakshmi Natarajan, co-founder and director of HipBar.
Kunal Shah and his brother Rohan Shah have joined the board of HipBar as directors. Rajalakshmi has resigned from the company. Although Prasanna is still a director.
With this acquisition, Cred will now directly give cashback to the user's wallet instead of their bank accounts. Users can then use the wallet to pay credit card bills and purchase products from its merchant partners.
This is a smart strategy by the company to make the customers stay connected with their ecosystem.
“It appears to be a smart move as the wallet would enable CRED to drive repeat transactions through its own payment instrument,” said one of the entrepreneurs who doesn't want his name mentioned in the article.
Parfait Finance and Investment
In November 2021 Kunal Shah acquired a non-banking finance company, Parfait Finance and Investment. RBI has approved this acquisition and it will help the company to extend its lending services to its users.
This acquisition is part of Kunal Shah's plans to provide a range of financial services to its exclusive Cred community. The company is already providing loans through a partnership with IDFC First Bank.
The company has also launched Cred Mint by partnering with LiquiLoans, an RBI-registered P2P non-banking lender. Cred Mint allows users to lend money to other Cred users.
The company has also applied for a payments aggregator license. Using this license Cred can process the payment of merchants with consumers online. The merchants can accept payments in the form of debit cards, credit cards, e-wallets, or bank transfers.
The payments aggregator license will help Cred to enable e-commerce on its platform.
In December 2021, Cred acquired Happay, a corporate expense management platform, in a cash-and-stock deal at a valuation of $180 million.
Happay is a business expense, payments and travel management platform that manages work-related expenses for over 1 million users globally.
This deal allows Happay to work as a separate company but its employees will work closely with Cred to help the company scale its business and add new financial services for the Cred users.
The 230 member team of Happay will get all the benefits that the employees of Cred get, including its ESOP program.
“The move will bring in synergies between Cred, the majority of whose members are professionals who use it to manage personal payments across multiple credit cards, and Happay, the only unified platform for business expenses, payments, and travel bookings,” a statement by Cred said.
Happay's in-house payments system will help the Cred users to manage their expenses on their credit cards.
“With professional expenses forming a significant portion of credit card spends, bringing professional expense management into the Cred ecosystem is a natural extension of our proposition,” Kunal Shah said.
As you can see Kunal Shah is making Cred future ready. The company is unveiling multiple revenue verticals in the form of house rental payments, lending and wallet payment business along with e-commerce.
These acquisitions show us that Cred in the future might become a banking institution for its exclusive users. It will make the platform an irreversible ecosystem for its exclusive Cred community.
How many startups Cred has acquired?
In total, Cred has acquired 3 startups. HipBar, which is an alcohol delivery and payment startup, Parfait Finance and Investment, which is a non-banking finance company and Happay, is a corporate expense management platform which will allow users to manage their expenses on their credit cards using the Cred app.
Is Cred approved by RBI?
The services that Cred offers to its users do not require the approval of RBI. The credit score of the users is verified by a credit rating agency which is also authorized by the RBI.
Is Cred a unicorn startup?
Cred entered the unicorn club in 2021 after raising $215 million in funding, at a post-money valuation of $2.2 billion.