How CRED’s Rival CheQ Is Aiming To Revolutionise Credit Management In India

• Aditya Soni, formerly of e-commerce giant Flipkart, decided to strike out on his own in 2022, founding the credit management firm CheQ.
• You can redeem your 1% back in CheQ Chips for cash, vouchers, or app credit that you can use to pay future invoices.
• CheQ claims to have served 400K+ users in a little over four months.

In the West, credit cards have been at the forefront of the shift to digital payments, but in India, the universal payments interface (UPI) has taken center stage. Although UPI has largely replaced other digital payment methods in India, the credit card industry in the country has expanded rapidly since 2016.

Although the common story about credit cards in India centers on their low penetration, credit card transactions have recently surpassed those of debit cards.

The number of credit cards in India has more than doubled since 2020, and there are now more than 86 million in circulation. The percentage of purchases made with credit cards rose 20% year-over-year in April 2023, while the percentage of purchases made with debit cards fell 31%.

New users, who often require hand-holding and incentives to enter this new payment system, are also being pushed forward by credit card management startups. Every major player is pursuing the credit management industry through some service, from specialized applications to'super fintech apps' like Paytm, PhonePe, Amazon Pay, and Google Pay.

Their goal is to convert some of the 86 million current credit card holders to using their cards for things like smart payments, credit management, and more.

CRED is the pioneer in the credit card management field, and while most people are aware of it, the Bengaluru-based unicorn is expanding into new areas to reach its $6.4 Bn valuation. This has made way for CheQ, the newest player in this field and the brainchild of Aditya Soni, formerly the head of payments at e-commerce powerhouse Flipkart.

In 2022, Soni decided to take the entrepreneurial plunge and establish CheQ, leaving behind his relatively secure position at the ecommerce company.

The 23rd of February, 2023 marked the official launch of the Bengaluru-based fintech business, and according to Soni, the company's rewards-focused credit management solutions have already found favor with the relatively young credit card user base. In reality, CheQ claims to have served 400K+ users in a little over four months.

To put it briefly, CheQ is a platform that allows users to make EMI and credit card payments. The service's signature "Pay Together" function also enables simultaneous bill payment. It also provides a 1% bonus in the form of CheQ Chips for making timely payments on credit card bills and EMIs. The user can cash out their virtual currency and have the funds deposited into their real-world bank account. You can also use your CheQ Chips to buy brand coupons or make future in-app purchases and payments. (more on that later).

While initially resembling Kunal Shah's CRED, CheQ's long-term goal is to specialize in credit management rather than become a universal financial app.

CheQ has its sights set on the expanding credit card industry in India. However, with the rise of digital lending in India over the past several years, the company also sees an opportunity to assist consumers better manage their personal loans.

The app facilitates this by giving users a consolidated view of their overall credit exposure (including credit cards) and the ability to repay personal loans from several lenders.

Soni asserted that 1.5% of all retail credit repayments in India were processed through CheQ in May, despite the fact that the company had only been around since March. It expects revenue of $10-12 Mn in FY24, thanks in part to funding from Venture Highway and 3one4 Capital.

The aforementioned expansion in the credit market is the source of optimism for future earnings. The entrepreneur claims that the firm is active in over three hundred Indian cities and one thousand zip codes.

The rules around card tokenisation, which made online card payments easier, can also be credited with this expansion. It fits nicely with the aspirational mindset of modern Indian shoppers.

Before leading Flipkart's payments division, Soni was a product manager at CitiBank, where he gained extensive experience in the Indian banking, financial services, and insurance (BFSI) sector. He says this allowed him to witness firsthand how Indians handle their own finances. Because "tough times don't come with a warning," as Soni puts it, "the financial crisis of 2008 taught us to approach investment and savings with caution."

Zerodha and similar investment technology platforms appeared around the same time, and soon others followed suit. However, Soni aspires to do for the credit management industry what Zerodha has done for retail investing and stock market education.

He continues by saying that he has noticed the same trend in the credit card sector as the number of people who use credit cards continues to rise. India is experiencing its "credit card moment," but a 2022 analysis by paisabazaar found that only 43% of Metro users have credit scores of 750 or higher. The research noted, however, that 36 percent of customers outside of Metro areas have healthy credit scores.

To provide some background, a credit score is a numeric representation of an individual's creditworthiness as determined by a credit agency.

The firm is taking a practical approach to enhancing Indians' credit for the time being, but has lofty goals for the future. Its primary function is to help customers pay their bills on time, alert them if they are going to be late, and let them to keep tabs on their credit standing from one convenient location.