CRED launches UPI scan and pay, move may help increase in-app transaction volumes

Kunal Shah founded CRED in 2018. Illustration: Suneesh K

Credit card payments platform CRED said on October 1 that it will now allow users to make scan and pay Unified Payments Interface (UPI) transactions, an extension to the current offering of allowing its community of high credit score individuals to use UPI for making payments through the app.

The Tiger Global and Falcon Edge Capital (Alpha Wave) backed startup said it will award 2x rewards in case payments are made to their partner merchants, besides deals on brands and cashbacks on transactions.

Addressing the media ahead of the announcement, a company spokesperson said that the cashback will be added to a user's CRED Balance, and not to their bank account. The rewards will also be given in the form of CRED Coins or CRED Gems. Eventually, the move is expected to further drive in-app transactions as customers will use their rewards for payments on the app.

Kunal Shah, Founder, CRED said, "CRED was built with the creditworthy in mind. The country’s top 1 percent have set the stage for how India consumes and we believe they deserve an experience that celebrates their contribution. India has been leading digital payments adoption with revolutionary made-in-India products and UPI is delta-4 enabling infrastructure for innovation at scale. The CRED pay experience builds on top of this with privacy-first features, personalisation and other member exclusives."

CRED said that users will be allowed to create an alias UPI ID, helping them mask personal details like mobile numbers, ensuring enhanced privacy during payments. Once Custom Virtual Payment Addresses (VPA) are activated, payments will be made via members’ alias UPI ID by default.

In situations where payments are stuck, CRED will prompt members to initiate a fresh transaction with a guarantee that they will be credited money back in cases where a payment has been debited, not reached the recipient, and is later deemed successful. Further, members can personalise their payment screen by adding accessories by redeeming their CRED coins.

Like all of CRED's offerings, access to scan and pay through UPI will also be available for individuals with a credit score of over 750.

CRED, founded by serial entrepreneur Shah, started in 2018 for India's most credit-worthy individuals to pay their credit card bills and earn points. It has since expanded into lending, e-commerce payments, advertising for brands, and providing short-term credit via Buy Now Pay Later (BNPL) options.

Shah has also ramped up CRED’s commerce play by onboarding multiple online-only consumer brands on its platform. It recently introduced a zero commission Cred store onboarding platform, waiving off listing fees for onboarding and commissions from any sale for all brand partners.

While CRED has rapidly expanded into payments, lending, investment, and commerce, it remains to be seen how it will effectively cross-sell, upsell and monetize each of these engines.

Using cashbacks as a means to onboard customers is a highly debated move in fintech, although used by most players. Industry executives and experts believe that customers lured through cashbacks and rewards may not stick once these are rolled back after a certain point. Only the effectiveness of the offering and products ensure that customers continue using these platforms.

A CRED spokesperson said that after the initial years of achieving product market fit and retaining customers while providing rewards and cashbacks as an incentive, CRED is now on the path of monetising from its offerings.

"The economics are a lot more rational (now) in terms of how a traditional business would think about whether it is making money or not. We are making very good progress in terms of monetisation as well as reducing our costs for providing incentives," he said.

UPI transactions by itself are not chargeable as per government norms and do not aid in revenues. However, with the high traction that UPI sees, it has been a tried and tested method to grow app usage and in-turn cross-sell other offerings.

UPI is dominated by two to three players enjoying a majority share of transactions -- PhonePe, Google Pay and Paytm Payments Bank. In August, PhonePe's share in overall transactions stood at 48 percent. Google Pay and Paytm Payments Bank's shares stood at 34 percent and 14 percent, respectively, for the month.

Currently, CRED accounts for less than 1 percent of overall UPI transactions. The app saw 14.81 million transactions amounting to Rs 19,084 crore in August. Although, CRED will not be directly competing with leading UPI apps as its audience is limited to credit-worthy individuals.

Moneycontrol had reported in March that CRED's losses widened by 45 percent year-on-year to Rs 524 crore for the period ended March 31, 2021, from Rs 360 crore a year ago, even as the company's revenue grew 5x to Rs 18.16 crore.

The startup is valued at $6.2 billion after it raised $80 million in June as part of its Series F funding round led by Singapore’s sovereign wealth fund GIC, along with participation from existing investors.