Hidden Startup Secrets of CRED | CRED Business Model

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Hidden Startup Secrets of CRED | CRED Business Model

Company Details

City: Bengaluru
Founders: Kunal Shah
Founded: 2018
Industries: Credit Cards, Financial Services, FinTech, Payments, Personal Finance
Number of employees: 251-500
Revenue: Rs 88.6 Cr (FY21)
Official Website: cred.club

CRED Business Model

Cred, the company that started in 2018, has been evaluated at more than 40,000, but earning a profit is still a long way off. This company has been in loss for the last 3 years. The company’s loss has increased from Rs. 61 crores to Rs. 524 crores as of 2021.
Now the question arises, How is the valuation of the company, Which has been in loss for the last 3 years, so high?

Many of us still believe that CRED is simply a card bill payment app, but the reality is quite different. CRED is doing something that most people are unaware of, and it’s so powerful that it’s hard to imagine. Learn More Licious Business Model

The question is what CRED is doing ? And what will be the future of this company ? 

CRED Startup Story

The story begins in 2015, when Kunal Shah’s first Startup, Snapdeal, was acquired for 400 million dollars. After the acquisition, people asked just one question: “What will you do next?”
Kunal Shah then traveled to different countries and conducted polls on Facebook and Twitter. Through this, he discovered several interesting things.
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He observed that in developed countries, the trust system among people is very strong. In these countries, there are no attendants at petrol pumps or cashiers at grocery stores. 
People trust each other and do not ask for demand drafts. He wondered why this was not the case in India. The answer was “Behavior Incentivization”.

Tech startups of developing markets have a lot to learn from developed global tech ecosystems.

Many solid operators that have worked in these markets can start solid businesses teaching the “rest of the world” how to build.

— Kunal Shah (@kunalb11) December 24, 2022

Have you ever thought , in childhood when our parents use to come and say to us, study because exams are approaching but why did no of us feel like studying ? 

This occurs because the action of studying had no accompanying incentive. Our bodies are programmed to repeat actions that provide incentives. 
In foreign countries, every ethical and responsible behavior is accompanied by a reward system. This incentivization, without the need for force, teaches people to be trustworthy.

However, this is not the case in India, especially when it comes to financial matters where people hardly trust anyone. Observing this, Kunal Shah had an idea, and that’s where CRED started.
Very few people are aware of this, but CRED is neither an aggregator nor just an app. You may be wondering What CRED is and what the company is doing.


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CRED Founder – Kunal Shah

Firstly, Kunal Shah’s business theories behind FreeCharge and CRED are based on his Delta 4 theory concept. According to this theory, designing a new system brings efficiency and changes to inefficient systems. 
If the scale of the change is greater than 4, it creates an irreversible shift in behavior. For example, companies like Ola and Uber have altered our behavior through this concept. 
We now have the convenience of booking a ride with just a few taps on our phones and it has become so commonplace that we wouldn’t think of going to a taxi stand if a ride is canceled. Learn More Startup Story of Apna
In the same way, the inefficiencies of the credit card world were a golden opportunity for Kunal Shah. Late payment of credit card bills results in extra interest, late fees, and other hidden charges.

And this is where CRED comes in. At a time when everyone’s focus was on charging extra for missed credit bills, CRED started incentivizing timely payment of credit bills. With the CRED app, you can monitor the hidden charges on your credit card based on multiple card spending insights. 
Additionally, CRED not only gives bill payment reminders but also provides cashback and CRED rewards to those who repay on time. 
In fact, CRED sometimes has such incredible offers that people have received 100% cashback on their credit cards. 
But have you ever wondered what makes CRED special in India, where there are many big Companies and anyone could easily do these things?

CRED APP

What special things does CRED DO?

If you have ever used CRED’s app, you may have noticed that it is frictionless, making it easy to use for all your bill payments, from gas, water, and electricity to rent, education, and even loans. 
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The app is so user-friendly that you’ll never want to use another app. However, to use CRED, your credit score must be above 750.

But have any of you thought, “Why is it so?” 

The first is that people with a credit score above 750 are considered trustworthy and responsible by CRED. 
This makes them eligible for exclusive rewards and benefits on the app. Secondly, by only allowing people with a credit score above 750 to use the app.
CRED has formed a community of trusted and responsible individuals who are more likely to repay their bills on time, leading to an improvement in the overall credit behavior of its users.

Two Powerful Things Happen

  1. More Money Flow: In the system as people with high credit scores are more likely to have a good financial history and are considered trustworthy borrowers, thus attracting more investment and loan opportunities. This in turn leads to more money flowing in the economy and contributes to overall economic growth.
  2. When someone becomes a credit card user then they become an exclusive part of the CRED  community .
When someone becomes a credit card user, they become an exclusive part of the CRED community, which is a source of pride. 
Once someone joins the CRED community, they are eager to share this news with others and encourage them to join as well. 
However, to be a part of the CRED community, a person’s credit score must be over 750. 
As a result, people are motivated to improve their financial behavior and maintain a high credit score in order to enjoy the benefits of the CRED community. Read More: Startup Story Of Classplus

This contributes to a healthier economy as more people become responsible credit card users and take advantage of CRED’s exclusive community, paying their bills on time and earning credit coins.

CRED Store

CRED Store is an online marketplace by CRED that offers a curated selection of products from premium and luxury brands to CRED members. 
CRED members can use their reward points to purchase products from the CRED store. The store offers a wide range of products including electronics, fashion, home decor, and more. 
The goal of CRED Store is to provide an exclusive and enjoyable shopping experience to CRED members while also encouraging them to use their rewards points.

CRED Mint 

Where people can invest their money and earn an interest of 9% per annum.
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CRED Stash

Where people can take a loan without any collateral.
All these things make the CRED Community Premium and Exclusive. Today, the community has more than 75 million people, interestingly all of them belong to India’s top 1% of the population with wealth and understanding to use credit cards. 
As a result, CRED has a user base of India’s top 1% customers and monetizing it is straightforward. In the future, it will fill gaps in losses by introducing new products and services. 
But the most interesting thing is the change it brings in people’s habits of paying their bills on time and spending money responsibly. Learn More Business & Revenue Model Of 1mg

CRED Logo And Tagline

The CRED logo is a stylized letter “C” in red color. CRED tagline is “Bharosa Aur Suraksha Dono,” meaning “trust and safety.”
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The tagline emphasizes the company’s mission to incentivize responsible credit behavior and encourage users to make timely payments on their credit card bills.

CRED Competitors

CRED’s competitors in the Indian market include:
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  • Paytm – A leading digital payments company in India that also offers a credit card bill payment platform.
  • Billdesk – An online bill payment platform that enables users to pay their credit card bills and other bills online.
  • Google Pay – A mobile wallet and online payment system offered by Google in India.
  • PhonePe – A digital payment platform that allows users to pay bills, recharge mobile phones, and make other transactions.
  • Bajaj Finserv Wallet – A digital wallet offered by Bajaj Finserv that allows users to pay bills, recharge mobile phones, and more.
These are some of the key players in the Indian market that compete with CRED in the online bill payment and rewards space.
CRED Delta 4 is so powerful that once someone uses the CRED app, they won’t look back to traditional systems.

Important Business Lessons to Learn From CRED
  1. Know what you’re doing. Many people want to start a business, but they don’t know why. This is one of the reasons why businesses fail. Profits and losses determine your financial position.
  2. The second lesson is to create irreversibility. Whenever you make a change that eliminates inefficiency on a large scale, the result is irreversible behavior.
  3. Dig deep to understand it briefly. If you want to understand a business, don’t focus on its profits, losses, size, and valuation first. Instead, try to grasp the core of the business.

What Is CRED?

Cred, the company that started in 2018, has been evaluated at more than 40,000, but earning a profit is still a long way off. 

This company has been in loss for the last 3 years. The company’s loss has increased from Rs. 61 crores to Rs. 524 crores as of 2021.

How To Use CRED Coins?

Here’s how to use CRED coins: 

Open the CRED app: Open the CRED app on your phone and log in to your account. 

Earn CRED coins: Earn CRED coins by paying your credit card bills on time or by referring your friends to the app. 

View your CRED coins: Click on the “CRED coins” option in the app to view your CRED coins balance. 

Use your CRED coins: To use your CRED coins, navigate to the “Rewards” section of the app, where you’ll find a list of rewards that can be unlocked using CRED coins. 

Select the reward you want to unlock and click on “Redeem” or “Claim” to use your CRED coins.

Enjoy your reward: Once you’ve claimed your reward, you can enjoy it as per the terms and conditions associated with it.

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