I have an admission to make and I'm going to come right out with it - I don’t have a credit card. Out of choice. Maybe it's a function of knowing just how exactly credit card companies make money that I have stayed away from it, maybe even foolishly missing out on rewards.
I have a phobia of missing due dates. So maybe what I really need is a fintech company that will use its VC dollars to not charge me sky high interest rates if I miss a due date.
It looks like the VC gods heard me after all.
Credit card challenger Slice, in November, raised US$220 million from the likes of Tiger Global and Insight Partners. And with that firepower, Slice is issuing about 200,000 to 250,000 cards per month, trailing only the large banks like HDFC Bank and ICICI Bank in terms of monthly credit card issuances. Both banks issue between 250,000 to 300,000 cards on a monthly basis.
Now, Slice is not really a credit card per se. In fact, it’s closer to a prepaid wallet loaded with credit than an actual credit card. But it’s trying to make up for all the weaknesses that traditional credit cards companies have by offering fast disbursal, rewards on online platforms, and the ability to convert outstanding dues into three-month-long interest-free EMIs.
However, in doing so, Slice not only loses the ability to charge precious interest income, but also ends up washing out any money it makes by spending on rewards.
The hazy economics hasn't deterred companies such as Uni Cards and LazyPay from jumping into the segment with pay-later cards, though. The idea here is: make credit cards an attractive, user-friendly proposition and acquire millions and millions of customers who'll generate a treasure trove of transaction history, on top of which one can give more products. Where have we heard this before now?
Read our today's articles on well-argued to know more about how the challengers in the credit card segment are mounting a fight to build a better product...
PS: Tomorrow is the 72nd anniversary of India’s Constitution coming into effect and the country turning into a republic of course. It is a national holiday in India, and we will be taking the day off from publishing - So see you back on Thursday! www.multimediastudio.net