cred business model how does cred make money

Uncovering the CRED Business Model. How does CRED make money?

In this article, we explain the CRED Business Model using the Business Model Canvas and learn about how CRED makes money.

Cred, a rapidly growing Indian fintech startup, has garnered significant attention in recent years, revolutionizing the way credit card rewards and payments are managed in India. Founded by serial entrepreneur Kunal Shah in 2018, Cred has managed to capture a substantial share of the Indian fintech market with its innovative approach to credit card payments, rewards, and financial management.

In this blog post, we will delve into the business model of Cred using Alexander Osterwalder’s Business Model Canvas. We will take a close look at the company’s value proposition, customer segments, channels, customer relationships, key partners, key activities, key resources, revenue streams, and cost structure.

But first, let’s acquaint ourselves with the origins of Cred and the journey that led to its inception.

The Founders and the Story of Cred

Kunal Shah, an entrepreneur with a background in philosophy, was no stranger to the startup ecosystem when he founded Cred. Prior to Cred, he had co-founded FreeCharge, a mobile recharge and bill payment platform, which was acquired by Snapdeal in 2015 for $400 million. Post-acquisition, Shah joined Sequoia Capital as an advisor and remained associated with the firm until he decided to launch Cred in 2018.

The idea for Cred emerged from Shah’s keen observation of consumer behavior, particularly in the credit card segment. He noticed that while credit card users in India were growing, there was a significant gap in the market when it came to effectively managing credit card payments and rewards. Shah envisioned a platform that would not only simplify credit card bill payments but also incentivize users with exclusive rewards and offers.

Thus, Cred was born.

Osterwalder’s Business Model Canvas: A Deep Dive into Cred’s Business Model

  1. Value Proposition

Cred’s primary value proposition is two-fold: simplifying credit card payments and offering exclusive rewards to its members. By focusing on high-credit-score individuals, Cred has managed to carve out a niche for itself within the fintech landscape.

Some of the key elements of Cred’s value proposition are:

  • Easy and secure credit card bill payments: Cred provides users with a seamless platform for paying their credit card bills in a hassle-free manner. The platform offers multiple payment options, including UPI, net banking, and debit cards.
  • Exclusive rewards and offers: Cred rewards users with CRED Coins, which can be redeemed for various offers and discounts on popular brands, services, and experiences. The company has partnered with over 1,500 brands to offer an extensive array of rewards.
  • Improved financial management: Cred offers features like expense tracking, credit score monitoring, and insights into users’ spending patterns, enabling better financial management and planning.
  • Fraud prevention and security: The platform uses advanced encryption and security measures to ensure the safety and privacy of users’ financial data.
  1. Customer Segments

Cred primarily targets credit card users in India, specifically those with a high credit score. By focusing on a high-credit-score customer base, Cred can effectively offer exclusive rewards and deals from its partner brands, which benefits both the users and the partner brands.

Cred’s customer segments can be categorized as follows:

  • High-credit-score individuals: These are individuals with a credit score of 750 and above, representing a financially responsible and creditworthy user base.
  • Credit card users: Individuals who actively use credit cards for their day-to-day transactions and bill payments.
  • Urban, tech-savvy individuals: Cred’s platform is designed for users who are comfortable with technology and prefer digital solutions for managing their finances. These individuals are typically found in urban centers and metropolitan areas.
  • Affluent customers: Cred’s rewards and partner brands often cater to customers with a higher disposable income, offering luxury experiences and products.
  1. Channels

Cred primarily operates through its mobile application, available for both Android and iOS users. The app serves as a one-stop solution for users to pay their credit card bills, monitor their credit scores, track expenses, and redeem rewards. Additionally, Cred employs various marketing channels to reach its target audience, including:

  • Digital marketing: Cred leverages social media, email campaigns, and search engine marketing to attract and engage potential users.
  • Influencer marketing: The company partners with well-known influencers and celebrities to endorse and promote its platform, enhancing its credibility and appeal.
  • Strategic partnerships: Cred collaborates with brands and services to offer exclusive rewards and deals, generating interest and attracting new users to the platform.
  • Referral programs: Cred’s referral program incentivizes existing users to invite their friends and family to join the platform, facilitating organic growth.
  1. Customer Relationships

Cred focuses on establishing and maintaining strong customer relationships through exceptional user experience and targeted marketing efforts. Key aspects of Cred’s customer relationship management include:

  • Personalized rewards and offers: By understanding users’ spending habits and preferences, Cred curates personalized rewards and deals for each user, fostering a sense of exclusivity and loyalty.
  • User-friendly interface: Cred’s mobile app is designed with a simple, intuitive interface, ensuring ease of use and a smooth onboarding experience.
  • Customer support: The company provides prompt and efficient customer support through in-app chat, email, and social media channels.
  • Community engagement: Cred engages with its user base through social media, in-app notifications, and email campaigns, sharing updates, promotions, and financial tips to keep users engaged and informed.
  1. Key Partners

Cred’s key partners play a crucial role in delivering its value proposition to customers. These partnerships enable Cred to offer an extensive range of rewards and exclusive deals to its users. Some of the key partners include:

  • Brands and service providers: Cred collaborates with over 1,500 brands and service providers across various sectors, such as e-commerce, hospitality, travel, entertainment, and wellness.
  • Banks and financial institutions: Cred partners with banks and credit card issuers to facilitate seamless bill payments and credit score monitoring.
  • Payment gateways: Cred relies on payment gateway partners to enable secure and efficient payment processing.
  • Marketing and promotional partners: The company works with influencers, celebrities, and marketing agencies to promote its platform and enhance its brand visibility.
  1. Key Activities

Cred’s key activities revolve around maintaining and enhancing its platform, forging strategic partnerships, and acquiring and retaining users. These activities include:

  • Platform development and maintenance: Cred invests in the continuous development and maintenance of its mobile app, ensuring optimal performance, security, and user experience.
  • Partner acquisition and management: Cred actively seeks and manages partnerships with brands, service providers, and financial institutions to expand its rewards offerings and strengthen its value proposition.
  • Marketing and promotion: Cred’s marketing activities focus on raising brand awareness, driving user acquisition, and fostering customer loyalty.
  • Customer support and engagement: The company maintains a dedicated customer support team and engages with users through various communication channels to address queries, feedback, and concerns.
  1. Key Resources

Cred’s key resources include:

  • Intellectual property: Cred’s proprietary technology, algorithms, and mobile app represent significant intellectual property assets.
  • Partnerships: The company’s extensive network of partner brands, service providers, and financial institutions contribute to its competitive advantage.
  • Human capital: Cred’s experienced and skilled team, including engineers, product managers, marketers, and customer support staff, is crucial for the development and execution of its business strategy.
  • Financial resources: Cred has secured funding from various investors, providing the financial resources required for its growth and expansion.
  1. Revenue Streams

Cred generates revenue through multiple streams, ensuring a diversified and sustainable business model. These revenue streams include:

  • Transaction fees: Cred earns a commission from banks and financial institutions for facilitating credit card bill payments through its platform.
  • Partner commissions: The company earns a commission from partner brands and service providers for driving sales and customer engagement through its rewards and offers.
  • Subscription-based services: Cred offers premium services, such as CRED RentPay and CRED Stash, which generate subscription revenue from users.
  • Advertising and promotional fees: Brands and service providers may pay Cred for featuring their offers and promotions prominently on the platform, driving increased visibility and user engagement.
  1. Cost Structure

Cred’s cost structure comprises both fixed and variable expenses that are essential for its operations and growth. Key costs include:

  • Platform development and maintenance: Cred incurs costs for the continuous development, maintenance, and improvement of its mobile app and supporting infrastructure.
  • Marketing and promotion: The company invests in marketing and promotional activities, including digital marketing, influencer partnerships, and strategic collaborations.
  • Partner payouts: Cred pays a share of the revenue generated through rewards and offers to its partner brands and service providers.
  • Employee salaries and benefits: The company bears the cost of employee salaries, benefits, and professional development.
  • Legal and regulatory compliance: Cred incurs costs related to legal and regulatory compliance, including data privacy, security, and licensing requirements.

Cred’s business model, as analyzed through Alexander Osterwalder’s Business Model Canvas, demonstrates a well-rounded and sustainable approach to capturing the credit card rewards and payments market in India. By focusing on high-credit-score individuals and offering a seamless platform for bill payments and exclusive rewards, Cred has successfully carved out a niche for itself within the fintech landscape.

The company’s strategic partnerships, innovative marketing tactics, and commitment to user experience and security have allowed it to achieve rapid growth and secure a loyal customer base. As Cred continues to expand and diversify its offerings, it is poised to solidify its position as a leading player in the Indian fintech space.

Overall, Cred serves as a prime example of how a startup can identify and capitalize on market gaps by understanding consumer behavior and offering targeted, value-driven solutions. By leveraging the power of Osterwalder’s Business Model Canvas, entrepreneurs and businesses can gain valuable insights into the inner workings of successful companies like Cred and apply these learnings to their own ventures.

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