We have a non-banking financial company (NBFC) that provides the financing for transactions.
Rajan Bajaj, the founder and chief executive officer of Slice
Founded in 2016, Slice primarily offers an alternative to traditional credit cards. It processes $250 million annually, has on-boarded 300,000-plus customers, and hopes to have a million customers in the next 12 months. The firm is backed by Sachin Bansal’s Navi Technologies, angel investor Kunal Shah, and a host of venture capital firms. RAJAN BAJAJ, the founder and chief executive officer of Slice, spoke to Raghu Mohan. Edited excerpts:
How has Slice been imagined?
We come in with respect to the experience around credit cards, which is seen as very complex. Most banks earn from annual fee charges. We don’t have an annual fee at all. Banks’ credit cards businesses run on the minimum payment due, and the customer is never clear what this amount is. Many people don’t even understand that they will end up paying higher interest charges if they continue to pay only the minimum.
We have a non-banking financial company (NBFC) that provides the financing for transactions. We have partnerships with other financial institutions to raise debt to finance our customers. And our card is free to use. So, if you pay back at the end of the month, there are no extra charges. Additionally, there are no annual charges, and you end up earning rewards. The reason we are able to do this is because the inter-change rate we get is similar to that of banks. So, when you do a transaction through our card, the merchant, instead of getting Rs 100, gets to keep Rs 98 or Rs 98.5. And it’s this commission which funds transactions and makes them free, which is very similar to banks. When you roll over transactions, our interest rate is 36 per cent, compared to the average of 43 per cent charged by most banks.
Can you use Slice to square off outstandings on other cards?
We don’t support that kind of usage. And when you have to repay a bank’s credit card, you can’t use another card for that. The process is very complex. That’s why there are third-party payment apps like Cred, or a PhonePe, which will accept your credit-card payment on behalf of the bank. But our customers make their repayments directly and easily through the Slice app. They don’t have to use any third-party app, and this makes the transaction very simple for them. They control and manage their expenses through the app, even as they get rewards on it. We are like a Tesla of the credit-card world for our customers.
What is the extent of cross-selling on Slice?
Right now, we don’t cross-sell any products to our consumers. As and when we have other modes of commerce and products for our customers — for example, group buying, investments and insurance — we will do that in a way that is aligned with our values of transparency and simplicity. We will offer that experience to customers within our app and do it in a way they understand completely. We will ensure that they love the experience and are willing to bring their friends on to it.
One of the major metrics for us is that referral rates by customers should be very high, which is usually not the case. Usually, bank products are “push products”, where people stand at malls and movie theatres to sell you cards. At Slice, we don’t do that at all. Seventy-five per cent of our customers come from existing referrals.
Do you see banks hawking Slice products?
We think banks have their own advantages — scale, a huge amount of capital and low-cost deposits. But we are better at agility and customer experience. So, there are advantages to both entities, and we would like to partner banks wherever we think we can add a lot of value. We will also have other products, which could be banking products, but with our kind of customer experience at the top of these things.
What kind of an entity will a fully mature Slice turn out be?
Our ambition is to be one of the largest companies in the world. But that doesn’t necessarily mean that we have to become a bank or deposit-accepting NBFC. There are a bunch of companies that started life in the “buy-now-pay-later” credit-card play and then became neo-banks, or full-stack service banks. Nuo Bank of Brazil is one such example; Tinkoff Bank of Russia is another. The US is pretty much saturated because of the larger banks, but there are some early players in Current or Dave.
In China, we have Ant Financial. But that market is altogether different — because Ant and Tencent are a duopoly, unlike India, which is very interoperable because of the Unified Payments Interface. Being interoperable, no one gets to have a monopoly in payments, and anyone can become a payments entity. I think India is going to become very distant from the world. We are going to be the leaders, and Slice, hopefully, will go on to become something unique.
What is your typical customer like?
Some of our customers are new to plastic. Their average age is 24 years. They are usually salaried customers working in an IT company, living in a metro and away from their hometown. Slice is usually the primary card for 80 per cent of our customers, while the rest use other cards along with our offering.