Is CRED a Big Bubble in the Making?

I was a big fan of CRED when the app was launched and remember being one of its early users. However, it seems that CRED has changed course now.

Original Use Case

Making credit card payments through an app is no longer a unique proposition. The feature that was the foundation of the CRED app is now available on many other apps, including major payment apps such as PhonePe, Paytm, and APay, which all offer credit card payments and even bill reminders and cashback.

Even CRED's commission-based lending business is not unique, as almost every fintech app in India now offers loan sales to its users.

The narrative of tapping India's top 1% (with credit scores over 750) also seems less compelling, as even a secured credit card with just INR 2,000 in a fixed deposit can generate a credit score of 750.

Customer Experience

An ideal payment app should be simple, easy to navigate, and user-friendly. However, CRED's user interface now feels overwhelming, making a simple task like paying a bill seem daunting. The use of a casino-themed reward interface and excessive animations adds a level of artificial conceit and detracts from the user experience.

The strategy of luring users, who are considered to be India's wealthiest, into a time-consuming gamification process for petty rewards suggests a desperation to inflate app usage metrics.

Marketplace and Travel

CRED also operates a marketplace that lists products from various D2C brands. However, the marketplace has a user-unfriendly design, lacking a search option, the ability to cancel or return orders, and offering prices that are comparable to those on Amazon. There is little incentive for a consumer to make purchases through CRED, given the availability of similar products on Amazon with faster delivery and a more accommodating return policy.

The same can be said for the travel deals listed on CRED, which are often priced higher than those on MakeMyTrip.

CRED Coins?

This point likely speaks for itself.

Marketing and Competition

CRED has invested heavily in TV and newspaper ads, influencer marketing, and other initiatives. However, the Indian consumer, even the top 1% that CRED targets, is always price-sensitive.

Another app could easily take advantage of CRED's weaknesses by offering slightly better rewards to users, thereby attracting a portion of CRED's dissatisfied user base and benefiting from CRED's marketing efforts. CRED has already made the concept of paying credit card bills through an app mainstream, so there is no need to spend on convincing users to use a third-party app. And with access to public feedback about CRED's shortcomings, a new competitor could launch a product that is more appealing to users.

With great funding comes great responsibility, or so they say.

Given CRED's recent focus on animations and other superficial elements, rather than shipping new features, one must question if the app is trying to inflate its usage statistics and justify its current valuation.

The above article has been penned by Nikhil Bhauwala.