Less than three years after the Reserve Bank of India asked fintech firm Slice to stop issuing prepaid cards that mimicked credit cards, the company is set to launch a credit card, sources have told Moneycontrol.
The Bengaluru-based firm will issue credit cards under the Slice brand and has decided to go with the domestic card network Rupay, sources said. This will enable the customers to link the credit cards to their Unified Payments Interface (UPI) account, an increasingly popular payment method.
Unlike the earlier attempt, this time, Slice is a small finance bank authorised to issue credit cards. Only banks can issue credit cards in India, though the RBI has made a couple of exceptions.
Slice did not respond to Moneycontrol queries on the credit card launch plans.
Slice and Guwahati-based North East Small Finance Bank (NESFB) announced their intention to merge the two entities in October 2023, the first instance of a fintech becoming a bank in the country. The merger was completed in November 2024.
Behind the re-entry
Slice made its mark in the fintech world with its pay in three instalments, free of interest, prepaid card, which had all the features of a credit card. The company’s approach and expertise were in identifying and underwriting college students and young people, who are at the beginning of their careers with limited credit history.
At its peak, Slice had more than 2 million prepaid cards in circulation, challenging several mid-tier private sector banks' credit card business and inviting regulator's scrutiny.
According to the RBI, the functionality of the product determines the regulation and if the product is similar to a credit card, it would have to comply with applicable regulations.
Slice’s idea was to help consumers build profiles with credit bureaus, establish credit scores and ultimately secure their first full-fledged credit cards. Now it can issue credit cards to the same segment without taking the prepaid cards route.
“Slice always aspired to become one of the largest credit card/transaction credit companies in India. Now it does not need to work with any other bank, unlike many of its competitors,” one of the sources said.
It is not clear how many of Slice customers moved on to other credit card products after the RBI ban. Slice has UPI payments on its app, which kept some of the customers with the brand but it is not a large player. It remains to be seen if it can attract its once loyal customers back to its fold with the new credit card.
Competitive landscape
In a fast-evolving credit card landscape, Slice can iterate faster than others. It will have a level of control and feature launches that might not be easily replicated by the traditional banks, one of the sources said . Fintechs that launch co-branded credit cards with bank partners are often hamstrung by the bank’s policies and flexibility.
Flipkart’s credit and UPI app super.money, Scapia, Jupiter, OneCard, Kiwi and Uni are among the fintechs that have co-branded credit cards with banks, focusing on different segments.
Over the past couple of years, a few instances occurred where banks suddenly changed terms, forcing fintechs to find new banking partners and discontinue cards in circulation.
In some instances, the terms changed the nature and benefits of the credit cards, which made them unattractive to customers, causing disruption for both the startups and consumers, along with some erosion of trust in the brands.
The market size
While there are over 10 crore active credit cards in the country, there are only about 4 crore unique customers. There are more than 40 crore unique UPI users in the country, most of whom use debit for all payments.
Every month, more than Rs 6 lakh crore worth of merchant transactions happen on UPI, whereas less than Rs 2 lakh crore is spent using credit card. There is a huge opportunity to bring these transactions under the credit segment, which is being targeted by most finetchs.
Slice was last valued at around $1.8 billion during its fundraising in 2022. The company is backed by deep-pocketed investors such as Tiger Global.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
