Episode 6 Unearthing Virtual Credit Cards landscape in India

On this edition of Business & UX Story, Divanshu sits down with Vishal Ranjan, who is the founder and CEO of vCard, India’s first Credit Card built on the increasingly popular Unified Payment Interface. Vishal speaks about the inception of vCard, where he noticed that both digital lending, and digital spending have been growing exponentially over the past few years in the Indian market.
To hear all the ins-and-outs of Vishal, his journey, and vCard itself, tune in to Business & UX story now!

Episode Transcript

Divanshu Thakral 

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Hey Vishal, so good to have you as part of this episode of Business & UX Story.

I think we last chatted was about six months ago and I

hope, uh, you know, things are really good at your end and, you know,

family is safe. Uh, I hope we all get out of this situation really soon. 

So Vishal our last episode was around Neobanking with a company called Xpence. 

And, you know, we continue in the FinTech space which is very aggressive in India. I would like to tell people what you’re doing. Vishal is the founder and CEO at vCard which is India’s first UPI based credit.

And I would like him to talk more about vCard. So tell me Vishal how this happened to you. How did you identify that you could do something like that using UPI and build a virtual grade Card?

Vishal Ranjan 1.07 

Hey Divanshu, thanks a lot for having us here. 

So essentially this thought process started from the at a level of the Indian FinTech industry that’s the domentisation part. Thereafter, you saw a bunch of activity happening on the payment side. There were wallets, UPI, PayTM and whatnot. And on the lending side, people getting loans on a click and whatnot. But one industry which was at the cusp of these two, which is lending and payment that is credit card that seemed to have missed the innovation story. Missed the same incumbent, the big boys there’s BI, ICICI, HDFC of the world. Kept defining how to have more reward points that kept selling at airports, sending to the same card, same guy, five people at the bank to select the card and there were around 20 crore people who wanted a credit card as per RBI data, and nobody was willing to give it to. 

Divanshu 2.01

So basically, the market wasn’t growing. 

Vishal 2.04

Market wasn’t growing and still trying to serve the same target segments – so salaried people with fifty thousand and seventy five thousand and above salary. 

So, what we thought that if we kind of democratize the product, if we go beyond that, we grow to the next five crore, 10 crore, 30 crore people.

What is it that it will take to get there? So then you deconstruct, whether you talk from a design perspective. We say, what essentially a credit card is. There is a line of credit and there is a way of making a payment.  And then there are services – 30 day interest free, merchant topper, reward point etc. 

So essentially it was a fairly bit, almost a year of a DPR kind of an exercise to deconstruct a credit card proposition, identify cost elements, identify revenue models.  And then if I have to make a product on mass level, then what are the things we can do differently from existing cards? 

So one word came from the credit line. One came from mobile. From mobile,  you can originate cheaper. You can do customer service on WhatsApp. You can do collections much better. So those things came to us. We went to the back, we went to the NBFCs and banks saying I am doing a mobile credit card, what do you think? And the banks were like good idea and that you typically hear. But what we found after scratching the surface, there was all of it was very hard hardwired to the masters in the world. Even if this innovation was visible to different heads   taking names, but it’s true for almost all the big banks, they have a very strong predominant disposition to maintain the status quo.

They mentioned they have one ERP from MasterCard and Visa, we don’t want to touch it. Build on top of it. 

So MasterCard and Visa will always say the only way you can gratify a customer say is to reward point, whether you spend it in Turkey, whether you spend in Singapore, then you come to India

you’ll get reward points. Why? Because that is how for 70 years that is standardised the world. They have standardized every credit card in the world will give reward points. You will always sell in this fashion. You will always collect in this fashion. You will give customer service in this fashion. So then we figured out, then you are not changing a mobile credit card. You’re not making a new model. You are just taking the plastic and making it in the mobile app. 

Yeah. Yes. Think if you look at the banks, every respective credit card has a mobile app . But all of them, pre-supposes as a plastic in your wallet, right. Then you can do only a few things on that credit card. You can possibly look at your reward points. You’ve got to look some of the delivery payment and sorts of things. Nothing big shakes about the product.

So we took a fairly, you know, obviously educated guess and evovled called there. The moment we free ourselves from Master-Visa, then we can truly evolve the product that we think is right. The underlying principles. Exactly. Then what happens?

What is MasterCard and Visa monopoly about? The monopoly is from the acceptance. 

They are gone and put all the merchants in the POS machines. So there’s a solution that they have already build there. So from our perspective, we said that, okay, nobody can right now replicate that acceptance network, but one wave that was going on because of UPI was already growing so well in which that acceptance problem not only got solved, it got replicated a hundred times bigger. 

So in India there are hardly fifteen lacs merchants, which accept Master-Visa card. There are close to 15 crore people who can accept the UPI payment. Acceptance problem got solved. One-shot and that’d be a very expensive business in credit card.

PayTMs and Mobikwiks of the world have burned money to acquire merchants. My problem is solved within a day. Now comes the customer side. Then we said if we are not constrained by MasterCard and Visa, what are the things that are different? And then we started seeing there are multiple elements of not only how will you make money? UPI doesn’t have MDR. How will you raise money? Rather than on my loan book, I partnered with RBL bank and multiple NBFCs. How do you want to sell? Can I send it through channel partners? Right now we are selling it at shops. I was selling it to insurance agents. Credit Cards aren’t sold that way. 

Then we set up service. Can it be 24/7 service on call where you press one or press nine and listen to details? Can we give a complete 24/7 chat experience via smartphone?

So this, what we figured out is that it was not converting the plastic to a mobile phone, but building a new business model of a mobile credit card. The analogy that I would possibly see here is that 70 years back when some smart guys said that 3 inch by 2 inch plastic should fit in your wallet.

We believe we are at that correct place where we can define what a mobile credit card should look like, should have as a functionality, as a feature. Whether we become the biggest and smallest is not the point, but now going forward, every mobile credit card will have to be at least as good as vCard.

Divanshu 7:50 

Amazing. Amazing. And that’s a great vision statement to have where you don’t go with the way industry biggies are moving things, but create your own path. That’s basically disruption, right? So, great point there. So I want to understand this, Vishal UPI is, as you also mentioned, accepted pretty well in India.

I mean, there are a lot of users who use UPI and probably I would be one, you would be one. So now how does it kind of change like master and visa globally accepted? I go out, I use plastic or anything. It’s very easy to use. I would be the few usersIf you compare it in India, that who you have a plastic.

Now, if I go out can I use vCard outside India?

Vishal 8:42

Yes. So as of now there are three pieces to go, so the immediate answer right now is no. Two months from now, yes. And that is one. NPCI is making efforts, it’s already live in Singapore now. So they are doing a bit of there, but we are also doing that. If you really are looking for vCard for an external world, we are also giving a plastic card through RBL. So that plastic card can continue your life as you do in a plastic credit card world. In India, the kind of use cases that we are seeing is what people are spending vCard with, or what’s the kind of amount they’re spending that itself is, when you use the word disruption, sometimes it becomes a cliche, but we do see, you know, very path breaking behavior already in the last year and a half of this operation. 

Divanshu 9:31

Got it. Got it. Interesting. So that plastic connects back to the weak card app and sends the right information in terms of spends, in terms of everything. It’s integrated. It’s not like a plan. 

Vishal 9.43

Yes, you get a single bill. You have one lac limit and you spend 20,000 on MasterCard. You spend 50,000 on vCard. You get one bill of 70,000 to pay at the end of the month. 

Divanshu 9:54

Got it. Got it. So. Compliance in India or any financial sector it’s very heavy, right? Can you walk us through quickly tell us a few challenges that you are facing or you faced in getting all of this together and rolling it out. 

Vishal 10:13

Yeah. So like in any startup, especially in this kind of a regulated industry, I met around 58+ CXOs to get it through.  So that comes with the challenge, but let’s give it to them also the way that’s my idea of disruption or other entrepreneurial, the excitement of building something new is good. But from their side, I told you the example that you get a single bill which is 20 is MasterCard and 50,000 rupees vCard or something like that. Now but make it a slightly more complicated because MasterCard on its own is a T+2 settlement.

MasterCard comes with 2% MDR interchange fee. In vCard, there’s no interchange fee, there’s a reward plus. And so now if I could give you a single bill, the limit management, fraud management, authentication, authorization. Unless you are as good. If not better than the MasterCard-Visa platform, they will not accept it back.

No self-respecting bank, just because an entrepreneur is excited about an idea, we’ll risk their MasterCard program, that credit card program, and open a new plan of UPI. Unless my technology, my business process, my ERP is as good as what they’re doing right now. 

It took us two months to get the product live with RBL Bank and not to say the bank was good or bad.  Simply because multiple people, head of operations, head of compliance, head of risk, and then NPCI, because we were bringing in UPI, all of them had an oversight on the product. Ultimately, board level supported product. If this product becomes as good as what we think is good, it is a to industry changing product. Five years from now, or two years from now, people will expect a mobile credit card should have UPI payment functionality. So that is the commitment with bought from RBL at that bank. But the answer why they took time was because they wanted to baseline the product with all sophistication, with the same security, same compliance as a Master-Visa product.

Divanshu 12:14 

Got it. I understand that. I mean, bank’s role is very important here, as you said. They have to have that checklist approved in terms of the regulation, compliance so that they can risk a proposition like this. Fair enough. Yep. Understand that. So, Vishal, why don’t you tell me a bit about how users are using it?

What, how are you excited about the, uh, data that is coming in terms of spends and user adoption and all that? 

Vishal 12:45

Oh yeah. In fact, I told briefly earlier that the way, the customers, again, I need like to have a different vision of the end state of the product, but right now, what the customer sees vCard as is a quick [00:13:00] contrast to Google Pay or PhonePe. For them Google Pay and PhonePe is like a debit card. When I make a payment, the money goes from a bank account. vCard is the only one as a credit card. You get 30 days to make a repayment. 

Now because it’s a UPI, people are paying 20 rupees for grocery or 200 rupees of fuel or 2000 rupees for MakeMyTrip and 20,000 rupees of school fee, home rent, or even for COVID people have paid 50,000 rupees for their parents in their hometown.

Why I’m making this example here is in a Master-Visa world, even though you have given you a one lac limit or five lac limit, there are only X amount of use cases for which you can use a plastic card. You cannot use a plastic card to pay your father’s bill in your hometown. You know, a school fee. 

So the way we are seeing here is a lot more P2P cases paying to the driver or paying to the maid. And right now almost everything is happening in the service economy. So if I have to pay to my carpenter or a car mechanic on the phone, because I cannot think that go outside because of COVID, that’s happening on vCard.

The mechanic will not accept a plastic. And because of that, that kind of monthly spend that we see in the credit card right now do something between 25 to 30,000 rupees slightly more than 30 to 35 thousand bucks. If  you compare that to a plastic world, average credit card bill in India has hardly crossed eight to 10,000 rupees.

So if you’re a Citibank, it will be 14-15,000 rupees. For SBI, it would be four or 5,000 rupees. So what we know for sure that our credit card customers are using vCard, not only for the regular merchant payments that Master-Visa used to do but 20 other service related payments which normally MasterCard was not meant for them.

Divanshu 14:52

Right. Got it. And these are very encouraging numbers for you and especially the space that you’re trying to as you said you’re using your word, create a part breaking solution for the industry, so these are encouraging numbers indeed. Yeah. So Vishal, how did it occur to you that and it’s definitely a consumer product, it’s a consumer facing product that this is the right time to kind of go for a design overall.

And I’ll like to put out a disclaimer to the audience that we worked with you and improving the design and working on the entire product with you. And how did it come to you that this is the right time for me to switch gears and move into and get a better product designed?

And if you can also walk us through some impact that you saw once the new design meant life.

Vishal 15:52

Oh yeah. To add to your disclaimer, put a double disclaimer here that I think that was one of the best return investments that we are having in this [00:16:00] journey. So that way I think I put across the product, obviously we needed that contemporary touch, that we needed the kind of a solution, which is, you know, is more customer friendly. And being B2C, you need to be customer friendly and all of that is due to the contemporary side, but the UX part of it. In general, money happens to be intimidating. You put a 500 icons on the homepage, you put 20 things that clutter your page, and then you imagine a 45-year-old or a first time new, young first job guy trying to make a payment.

He is unnerved, or at least he is scared of making a mistake. So I think we were very sure that we wanted to make the customer experience. I wouldn’t say gamification, which is more lively, more friendly, more welcoming, a bit forgiving in their user journey. And I don’t know if that’s the correct word to use in the UX world, but what has come as a feedback on the before versus after design was we did a couple of clicks here and there. And then when we are able to figure out where we have gone wrong and it was easy for the customer to navigate. And, I know of bank products, I know I have a huge respect for the neobanks that are coming in or even PTM or the PhonePe. There are so many call for action buttons over there.

So, you can honestly get lost what you’re asking for. So I think the one design solution that we gained when Onething became a part of it is it helped us understand the user journey better. It helped us declutter the solution. And obviously we are adding a lot of new features.

Possibly, there will be a time in that six months, I’ll ask you to do a second round of cleaning as needed. But as a product vision, we wanted to have a clean experience possibly from your team. Also, the baseline was could it be as good as an Apple Card, which is now getting such good reviews in the US right.So I think that kind of a baseline kept us very, very focused on not adding too many things in the same page and it has helped. And I’ll be, as we are scaling the program for them, we are adding new features.

We are trying to stay to that design principle. And hopefully this is something which goes with the DNA of the product and goes into that direction. 

I’d also like to mention one good piece, which we were offered

in which we didn’t do it, possibly we’ll do it a good time. We actually got four options at that time, but I think we picked two options and then we fit with one. The second option was for an evolved user. Then there was one user for an elderly citizen, and then there was a student kind of an option.

Later, we figured out that we do have four different personas of our customers. As of now for whatever budget reasons or the ease of implementation, we have gone ahead and picked up the one that suited the largest canvas, but I see a merit in having four different skins and threads of the product or possibly there’s four different user experiences together.

It’s not just the colour or the font that are different.

You know what a 55-year-old or 50-year-old person would ask for versus an evolved high-end user will use for are going to be different than we are sensitive to that. 

Right. Different financial needs, different experiences, right? Fair point there, Vishal. And I am happy that it created that impact that you were looking for.

Divanshu 19:32

So without taking much of your time why don’t you just share some emotional part of this journey? There will be a lot of ups and downs here and there. If you can help us get into the emotional side of an entrepreneur like you, it’ll be great.

Vishal 20:02

Yeah. So, this is actually my fourth venture. So I have gone through that journey and a bit of the back and forth down here. So yeah, but I put in this more than the emotion. You know, that it’s a part for the post and maybe that’s all that the difference between a first time was a seal on the entrepreneur that things will not go as per plan. You know that you’ll always be in a financial crunch and you’ll always have a problem with the employees, customers, partners level. 

What was a bit different or difficult here was the huge amount of externalities in almost all the other businesses that I had done earlier. I’m sure. Even for your Onething you do a good job yourself and the rest of it. 

Getting customers will always be a task to do, but it doesn’t have as many externalities in here. The frustration came from the fact that even to get the product to live, it’s whether the end customer likes me or not is much later. But to get the product live you have to get ticks from 200 people and again, RBL being helpful.

It’s good. But there are the banks. Some of them laughed. Some of them are too audacious. Some of them wait and watch. And I’m okay with that kind of a judgmental view from people of the industry because honestly, they come from a higher pedestal and we are possibly nowhere near. The place where it came across that I am ready, RBL is ready, maybe NPCI is ready, but some payment gateway is not working well. And all of us are stuck for a month. So what we saw, is it a good industry for a three-people company to build it from a garage? Maybe I would not recommend simply because there are so many moving parts. And I have been mentors to multiple startups here.

I think the companies with too many moving parts are difficult to set up, but once they’re set up, I think that makes it more of a business.

In our case, the moving parts are moving from regulatory, from banking side, from technology side competition, you know, regulations today, this will happen. Three days later the UPI, one fine day, the MDR on UPI was removed.

So now you have to rethink and that is the resilience that is needed in this kind of business. I think resilience is almost a euphemism for entrepreneurship now. If you’re not resilient, it won’t carry through. But not having a product life for two or two-and-a-half years, multiple people asking questions, whether at all we will see the light of the day.

Even now, I don’t know we have possibly done maybe 10% of our journey. We aspire to be a million cards in two years, we are right now around ten-twelve thousand cards. So yeah, we are talking about a hundred times growth. But that kind of a journey doesn’t look as scary as the journey from zero to 10,000.

So the problem will continue to be different from different, different stages, but getting the product live was okay as close as childbirth. 

Divanshu 23:00

I understand. No, that’s a great way to put it. It’s definitely a baby that you’re growing in. It needs all the attention and from various angles, it’s definitely a big moving part.

No, no, that’s, that’s great, Vishal. I am really amazed to hear this journey of yours. I think you actually answered my last question also that I was trying to put together that was what advice that you give to our listeners.

And I think resilience is one and ensuring that you stay on it is very important.

And that uphill task of zero to 10,000 is what is critical. If you lose up there, you have lost it. Once you’re there I won’t say it’s a rosy picture, but things start looking up for you. And I think that’s the stage you are at and things will keep getting better. I think you’ll get into that snowball effect very soon.

And, your fourth venture, which is this one would also be a success like the other three, and I’m really happy that we had this conversation and I wish you all the luck from our side, wish you all the health to your family and you from Onething’s team. 

And we look forward to chatting up again sometime soon.

Vishal 24:09 

Super, super, so nice for having me here, Divanshu and let’s stay in touch. 

Divanshu 24:15

Absolutely, Vishal.  Thank you. Bye-bye 

That was such an insightful conversation. Businesses and products get impacted to

design in ways more than more than we can imagine. If you would like to

listen to such more conversations, stay tuned, subscribe to business and

UX Story till then stay safe and keep listening.

Thank you.

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