The news: Indian fintech CRED is in talks with investors to raise funds at a $5.5 billion valuation.

This comes just weeks after the three-year-old startup finalized an investment of over $200 million at a pre-money valuation of about $3.75 billion, and six months after it raised $215 million at a $2.2 billion valuation.

What does it do? If the high-end customers that CRED caters to use it to pay their credit card bills on time, it offers them rewards at brands including Puma and Samsung.

• Its app enables its more than 7.5 million members to manage multiple credit cards, check their credit score, and receive insights into their spending through category-based analysis.
• In August, CRED launched Mint, a peer-to-peer lending feature that lets users lend to one another at an interest rate of up to 9% annually. Its members on average keep $2,685 in their savings accounts and have a credit score of 750 or higher—meaning this service offers them a more lucrative way to earn interest on their savings with a lower risk of borrower default.

What’s next?

• While CRED originally focused on acquiring customers, now it will likely shift its focus toward monetization.
• Its plans include using the fresh funds to invest in and acquire other fintech startups for inorganic growth—already it recently invested $5 million in CredAvenue, a corporate debt solution.

The bigger picture:

• Credit card issuance in India has attained a compound annual growth rate (CAGR) of 20% in the last four years. The number of cardholders increased from 29 million in March 2017 to 62 million in March 2021.
• India’s credit card industry is largely concentrated within the top four banks (HDFC, SBI, ICICI and Axis), which control around 70% of the total market. They are all supported by CRED.