Indian fintech startup Slice has launched a new credit card with Rs 2,000 ($27) as the default limit to tap into close to 200 million potential individuals in the country.
The offering hits the Indian market at a time when the adoption rate of credit cards has largely been stagnant. Currently, the credit card penetration in India is under 3%, with around 30 million unique customers.
The Bangalore-based startup, which raised about $83.8 million in debt and equity since its launch in 2016, has experience issuing its cards to young professionals with no traditional jobs.
The startup is backed by leading private equity and venture capital funds such as Gunosy, Das Capital, Finup, Blume Ventures India, Simile Venture Partner, EMVC, Tracxn Labs, Better Capital, Sachin Bansal’s Navi and angel investors such as Kunal Shah, who is the founder of Cred.
Rajan Bajaj, founder and chief executive of the startup, said that the new credit limit card is aimed at those who don’t have a great credit score. He said that the offering, which is considerably lower than the industry’s lowest of about $270, will slowly help customers build credit scores.
Credit cards are traditionally not built for lower limits because of limitations in risk management capabilities, Bajaj said, adding that the startup has taken a very different approach to risk underwriting right from the company’s inception in 2016.
“In the last few years, we have actively invested in building a strong risk infrastructure by leveraging data science. Without robust risk management capabilities, it’s impossible to scale such a business and make such a truly inclusive product. But once the capability is built, no one can take the growth away from you,” he added.
Currently, with a 50% month-on-growth, Slice’s NPA is still less than 2%. This, he said, is a validation of the startup’s “superior credit underwriting capabilities.”
The company said that both the eligibility and rewards are based on a user’s credit history and the limit being given. This industry ends up only rewarding those “pre-defined premium customers” at the cost of the ones that are not.
“However I don’t believe in this approach. The definition of premium users or top percent of the population is quite mechanical and static in the industry. At slice, we have really invested in finding an alternate way to this,” added Rajan.
The company said that the “Slice super card” is created to be the most rewarding card for all users, irrespective of their credit limit.
It plans to offer 2% instant cashback, unique offers across popular merchants like Myntra, Zomato, as well as the option to slice their bill into 3 months without any extra cost.
The company said that the application process is completely digital on the slice app, where a user can book their card in minutes.
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