How CRED Works? CRED's Business Model & Revenue Model

Michelle D'souza Michelle D'souza Jeenal Jain Jeenal Jain
Nov 9, 2021 8 min read
How CRED Works? CRED's Business Model & Revenue Model

CRED is a Fintech platform headquartered in Bengaluru, which allows its users to make credit card payments through its app and get exclusive offers. It was founded in April 2018 by Kunal Shah, Freecharge's former founder. CRED lets you handle and pay off all your credit card dues. It not only gives exclusive discounts on credit cards but also tracks expenses.

CRED entered the Unicorn Club in April 2021 with a valuation of $2.2 Billion that was accompanied by a funding round led by Falcon Edge Capital and Coatue Management LLP for $215 Million. Achieving this status in just two and odd years is a sign of CRED's amazing business model.

What is CRED?
Business Model of CRED - How does CRED work?
CRED Revenue Model - How does CRED make money?
Is CRED App Safe?

CRED

What is CRED and How does it work?

CRED provides the ability to reduce the pressure of handling multiple credit cards and to help pay credit card payments on a timely basis. Users earn points that can be used towards prompt purchases through the CRED application. In 2015, Kunal Shah sold Freecharge and was looking for an alternative concept to change people's lives.

During his study, he found so many automatic products in developed countries such as supermarkets with no cashiers, gas stations without an attendant, etc. but there's no such reputable mechanism that will allow people with zero extra charges to pay the correct amount of credit card bills in due time. It is best for creditworthy people. But the question was why should people pay their bills of credit cards through their APP, and so the idea came to reward the loyal credit card users who paid their bills on time. CRED was introduced in April 2018 with this plan to draw consumers.

Kunal Shah, founder of CRED
Kunal Shah, founder of CRED

Download and type your cell phone number in the CRED App. The app checks the cards connected to the registered phone number until the account has been configured. If the credit score is greater than 750, users would be allowed to use the exclusive app. Otherwise, they have been sent to the waitlist. When access is open, CRED apps will have access to the mail identification to read and scan the credit card receipts, such as due dates, the services' statements, etc.

  • CRED provides you with one location to handle your entire credit card range.
  • Whenever you pay your credit card bills, certain CRED coins are issued that you can use to earn discounts on different CRED partner products.
  • It analyses the overall expenses, secret costs, and records loan caps and advises you of all this so that extra charges can be avoided.
  • CRED security is the app's functionality that reads the email statements with details on balance, due date, bank costs, and bifurcation of expenditures.
  • The smart statement feature allows consumers to simplify costs by reviewing the CREDit card statements.

Business Model of CRED - How does CRED work?

How does CRED work
CRED Business Model - How CRED works

CRED rewards users for paying bills through the app. CRED partners with businesses to provide the offers. As a result, the businesses gain exposure and traction on a platform where people are already spending. As a result, CRED gets more offers to display on their application. Therefore, visitors have more reasons to join and pay their bills through the app.

The 3 pillars of CRED's business model - Customers who pay credit card bills, The CRED app, and the Businesses who provide offers on the app.

  1. CRED's Customers - Many people pay their credit cards using payment apps or by directly logging into their bank accounts. By using the CRED app, they can perform the same function of paying their credit card bills more beneficially. As more people use CRED to earn benefits, they share those benefits more widely.
  2. CRED App - The app allows users to sign up and see all the available offers on paying their credit card bills. As you continue to pay bills, you accumulate CRED coins which you can redeem for the rewards
  3. Businesses that provide offers on the app - Bringing businesses on board and forming tie-ups with them is imperative for CRED. The CRED app gives small and large businesses alike visibility as buyers of all types use it.

In order to access CRED programs, a credit score of more than 750 must be obtained. This application also allows users to share certain data such as credit card numbers, access to emails to track users' expenses and due amounts, credit score, and how they invest their money. CRED rewards its users with CRED coins for bill payments whic can later be redeemed with the offers available. In simple terms, CRED provides a basic incentive to make prompt bill payments. To make offers more attractive to the users, CRED partners with various businesses. In turn, businesses achieve exposure to buyers from all walks of life.


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CRED Revenue Model - How does CRED make money?

How CRED makes money
CRED Revenue Model - How does CRED make money

CRED earns money from listing fees that businesses pay to display their products and offers on its app. Moreover, financial institutions have access to the financial data collected from users in order to tailor their offers accordingly.

  • Through CRED, you can access products and offers from businesses that have paid to access Discover. Among the offers are fashion retailers, spas, Amazon gift cards, and more. These offers give their users a variety of rewards to pick from. As a result, it attracts users' attention. CRED receives a fee from the business every time a user redeems CRED coins from the app to pick an offer.
  • CRED collects your financial data as you use the app and continue to pay your bills to offer you better offers in the future. This is their second source of revenue. Institutions are always searching for the most reliable customers to use their credit cards, loans, and other products. To gain access to this data, banks and credit card companies pay CRED.

CRED has no single best source of revenue. CRED has a varied product/service span - Rentpay, CRED Stash, Store, Credit Card Payments, and CRED Pay.

  • CRED Pay was developed in partnership with Razorpay and Visa. It provides brands with a D2C channel, by offering them an instant payment experience on their platforms.
  • CRED's RentPay allows the tenants to pay monthly rents using a credit card, where the amount is transferred to the landlord's bank account directly. The main advantage that lies here is that the app helps users get an interest-free credit period on rent and also lets them earn reward points on their credit cards. CRED will charge users a transaction fee of 1% - 1.5% depending on the user's credit card network.
  • CRED Store is a member-exclusive selection of products and experiences at special prices. Every time you pay your credit card bills on CRED, you receive CRED coins. These coins can be used to win exclusive rewards or get special access to curated products and experiences
  • CRED Stash is a digital lending platform that makes a personal credit line available to users in a completely online manner. Here the Registration/ Subscription Charges is Nil. However, the bank charges interest on money borrowed which is displayed on the app while availing the loan.

Also Read: Startup Story & Company Profile of CRED


Is CRED App Safe?

CRED App is RBI Approved. Hence, it is safe.

CRED Is safe and RBI approved
RBI approved

Conclusion

CRED partners to view incentives on the application to firms. In exchange, clients of these firms become the consumers who redeem CRED coins for deals. With more credit card customers entering the app, they can gain more tailored financial details. Financial institutions such as banks and credit card firms profit from such a profound strategy with reduced consumer transaction costs.


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FAQs

What is CRED?

CRED is a Fintech platform headquartered in Bengaluru, which allows its users to make credit card payments through its app and get exclusive offers. It was founded in April 2018 by Kunal Shah.

How does CRED work?

CRED rewards its users with CRED coins for bill payments, which can later be redeemed with the offers available. In simple terms, CRED provides a basic incentive to make prompt bill payments. To make offers more attractive to the users, CRED partners with various businesses. In turn, businesses achieve exposure to buyers from all walks of life.

How CRED makes money?

  • CRED earns money from listing fees that businesses pay to display their products and offers on its app
  • CRED collects your financial data as you use the app and continue to pay your bills to offer you better offers in the future. To gain access to this data, banks and credit card companies pay CRED

Is CRED Safe?

CRED is approved by RBI (Reserve Bank of India). Hence, it is safe.

What is CRED Club?

CRED serves as a members-only club, which offers several rewards to the individuals like exclusive offers and other premium experiences if they happen to pay to make their credit card bill payments timely. CRED club helps the users manage multiple credit cards, which they can do along with an analysis of their credit score.

How to redeem CRED coins?

If you need to redeem CRED coins, you would have to check on the "burn" option, which will help the credit card users automatically credit the points to their credit card in the form of cash after they utilise the credit card for bill payment.

What are CRED rewards?

CRED rewards are the offers and rewards that the Kunal Shah-led CRED offers the CRED users with.

What is CRED Mint?

Founded by CRED, CRED Mint is a community-driven product that helps CRED members to earn up to 9% of interest per annum on idle money, which they can gain by lending to other CRED members with 730+ credit score. CRED Mint was launched with the company's collaboration with Liquiloans.

What is CRED 2021 revenue?

The CRED 2021 revenue was reported to be Rs 95.5 crore, as per its FY21 financials.

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