Everybody is aware of the benefits offered by Credit Cards. Such as enhanced financial health, better credit score, easy loan approval, etc. However, you need to be cautious about certain fundamental things while using a Credit Card. First, you need to stick to your limit while spending through credit cards. Also, you must pay the amount within the given period to avoid any penalty or to pay extra money. This sort of judicial use of credit cards isn’t a cakewalk for everyone. Slice, a fintech startup saw this loophole as a golden opportunity to enter the credit card system. With the efficient Slice Business Model, people can take care of their credits without worrying about the penalties. So what did it do?
You will come to know all about it in this write-up.
Slice: A Brief Overview
Before diving deep into Slice Business Model, let’s have a brief overview of the company-
|Type of Industrial Segment||Fintech Company|
|Founders||Rajan Bajaj (CEO)|
|Headquarters||Bengaluru (Karnataka, India)|
|Type of Brand||B2C (Business-to-Customer)|
|Market Valuation (FY22)||Rs.14,760 crores ($1.8 billion)|
|Revenue (FY22)||Rs.283.08 crores|
|Expenses (FY22)||Rs.542.49 crores|
|Net Profit/Loss (FY22)||Loss of Rs.253.67 crores|
|Competitors||CRED, OneCard, CheQ|
In the upcoming sections, you will get detailed info on the “Slice Business Model.”
Working Strategy: How does Slice work?
Let’s discuss the various working strategies of Slice with which it can offer exclusive services to the customers-
1. Slice Super Cards: Simplified Credit Management
This is the most loved feature of Slice. Why? You may ask. Because it allows you to slice or cut the total amount of credit into three easily payable sums of money. You can assume it like a buy now pay later service. This feature makes it superior to other credit cards. Also, you won’t have to pay any extra fee while filling returning the fee in three installments. Slice Super Cards serve as an effective alternative to traditional credit cards. Not only it simplifies the credit process but also makes it more accessible and user-friendly for the users. It also has a feature called “Slice Spark” that offers appealing discounts on shopping through slice cards.
2. Instant Cashback Rewards
Apart from simplified credit management, instant rewards confer immediate benefits to the users. You will get 2% instant cashback on every transaction through Slice Super Card. This feature differentiates Slice from traditional credit card providers. Thus, it attracts customers who seek benefits from using Credit Cards.
- Manageable Credit Card Expenses
- No annual fee
- No joining fee
- No hidden charges
4. Regular Charges
Let’s look at the fees/charges that you need to pay while using Slice-
|Types of Charges||Amount|
|Card Replacement Charges||Rs.500|
|Cash Withdrawal (ATM)||Rs.50|
5. Partnership with Banks
Let’s come to a notable point about this company. Slice is not a bank then from where it gets the funds to offer money for credit? You may wonder. It gets funds from partnered financial institutions and banks. It has collaborated with numerous NBFCs (Non-Banking Financial Institutions) such as-
- DMI Finance Private Limited
- Quadrillion Finance Private Limited
- Vivriti Capital Private Limited
- Northern Arc Capital Limited
6. Is Slice approved by the RBI?
No, Slice is not approved by the RBI. However, it owns an NBFC license with which it works in the Credit Card Fintech sector.
7. Slice Borrow
It allows you to easily borrow money within a few clicks. You need to pay a fee for each borrowed transaction. You can repay the loan over 12 months. Also, you can repay early without any early payment penalty. It will save your interest too!
Revenue Sources: How does Slice make money?
Revenue sources are a crucial part of the Slice Business Model. Some of its crucial revenue sources are-
1. Commissions from partners
Slice earns commissions or referral fees by partnering with other financial institutions or service providers. For instance, if Slice partners with a bank to offer a co-branded credit card or collaborates with an e-commerce platform to provide exclusive discounts, the company might receive a percentage of the revenue generated from these partnerships.
2. Merchant Fee
The merchants pay fees to this fintech company for processing transactions made with Slice Super Cards. This is a major source of revenue for Slice.
3. Late Fee: Penal Interest Income
Although Slice doesn’t impose any hidden fees or annual fees. But it earns a significant portion of its revenue through interest charges associated with its late fees. When customers borrow money or use credit facilities provided by Slice, they are typically charged interest on the outstanding balance.
Let’s look at the late payment charges-
|Payment Balance||Late Payment Charges|
|Up to Rs.500||Rs.0.00|
|Rs.501 to Rs.2000||Rs.15|
|Rs.2,001 to Rs.10,000||Rs.40|
|Rs.10,001 to Rs.25,000||Rs.100|
|Rs.25,000 and above||Rs.150|
4. Commission income from services
It offers premium services with subscription plans to provide enhanced features or benefits to customers for a recurring fee. It offers additional services, such as premium customer support, higher credit limits, or exclusive discounts. Customers can access these services by subscribing to a paid plan. This is a crucial source of revenue for Slice.
5. Commission income from loans: Slice Borrow
As you have read above, Slice Borrow allows you to take loans without any lengthy documentation process. For instance, you can borrow Rs.5 lakhs and repay it within the next 12 months. But you will have to pay the interest like any other loan. Thus, the commission income from loans helps Slice to make money.
Slice has implemented various marketing strategies to promote its services and attract customers. Some of its key marketing strategies are-
1. Success Stories
When a startup becomes a “unicorn” then the success stories become its most efficient marketing strategy. Similarly, Slice also shared its success story on numerous story-telling platforms. In those stories, Slice has shared how it helped the students to get loans and credit options to purchase books and other academic necessities. They showcased how their objective to focus and aid credit to India’s youth has helped it to gain a loyal user base.
2. Promotional Campaigns
Slice always markets its products by promoting the convenience and speed of its loan & credit services. It emphasizes its alluring features like-
- Quick approvals on loans
- Instant cashback on transactions through Slice Super Card
- Slicing (cutting) the credit into three segments
- No hidden charges
Thus, it differentiates itself from traditional credit card companies and gets ahead of its competitors. Eventually, these marketing campaigns helped it to gain a considerable user base.
By now you must have realized the core objective of Slice i.e. to provide financial solutions primarily. Slice business model is focused on credit cards for young professionals and students in India. Now in the concluding part, we will discuss what you can learn from Slice Business Model. First of all, you must know your target market. Slice’s target market was students who face challenges in accessing the traditional credit facilities. Therefore, it created the Slice Super Card i.e. a credit card service superior to the traditional one that offers credit easily. Also, it uses a digital-first approach so that customers can apply for and manage their credit cards online. Its simplified application process and the feature of slicing credit balance differentiates it from contemporary fintech companies.