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Why this fintech startup launched India’s first UPI-based credit line for students

When Aman Bhayana, an engineer graduate from Vellore Institute of Technology (VIT), was considering starting something for people his age in the fintech industry, he realized that most of his peers weren’t using Cards. Instead, they opted for UPI-based solutions.

Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application, merging multiple banking features, seamless funds routing, and merchant payments. It also caters to “peer-to-peer” collection demand which can be scheduled and paid for as needed and convenient.

“Maps are good, but UPI is so much more convenient”, Aman said.

Now 23, Aman organized his thinking and decided to focus on an age group that had been neglected by the fintech ecosystem until then: teenagers.

In 2020, Aman and Meherdeep Thakur, also an engineering graduate from VIT, launched the Bengaluru-based company Inasmuch asPayCrunchInasmuch as, a UPI-based credit platform for students. The secure and reliable platform aims to provide a unique experience for students when going out with friends for shopping, partying, etc. Aman initially started the business with Rs 1-2 lakh, before seeking further investment.

“The use case is for students, who are getting out but maybe low on funds. They can pay on the spot through UPI,” says Aman.

Pay Crunch team of 12+ people working remotely.

How it works?

PayCrunch is a microcredit loan app that makes it easy for students to borrow money. The buy now, pay later app claims to have over 10,000 users and aims to make financial management easier by helping to track transactions.

It uses a credit system to track a student’s repayments, providing them with attractive bonuses to encourage sound financial management. The offline feature ensures that lack of internet access is not a problem and improves accessibility across the country.

To integrate teenagers, Pay Crunch uses an alternative financial assessment process.

“We split our user rating between ability to pay and willingness to pay,” Aman explains. “Both of these things are done by understanding their spending habits. We also try to understand this pattern on social media,” he adds.

Pay Crunch, which currently employs 12 people, also partners with colleges and universities, with engaged student communities. This includes the under 25s, a group of over one million students in Indian colleges.

Credit: YourStory Design

The fintech startup is also in talks with restaurant chains, including Social, and fintech platform CRED, among others, to offer different programs and products to their users.

It plans to gamify the user experience and reward them with Pay Crunch coins, which can be used to make further purchases.

The market and prospects

Over the past two years, with the accelerated adoption of digital caused by the pandemic, many fintech platforms have launched BNPL programs. These include MobiKwik, BharatPe, Bengaluru-based Zest Money, and Lazy Pay.

According to RedSeer Researchin November 2021. The number of BNPL users in India could also reach 80-100 million customers, up from 10-15 million currently.

At the same time, teenagers have become the new favorite market segment of the startup ecosystem. From edtech to fintech, many young founders target this age group.

Fintech players that have found success with their offerings include Slice, backed by Tiger Global, a credit card payment player for young adults; FamPay; and Junio, which provide digital financial access to under-18s.

The vertical has attracted substantial venture capital funding from high-profile investors in the past and it is widely believed that the space is poised for strong growth, especially as under-18s who growing up today are digital natives.

Pay Crunch, which raised $500,000 from Y Combinator, is now looking to expand its user base and obtain an NBFC license, which may be difficult as the Reserve Bank of India (RBI) has introduced more regulations for private actors. It also aims to launch its own payment card, among others.

“The student crowd is the next big thing. Although the user base keeps changing every two years, if leveraged correctly, they could be lifelong customers,” says Aman.

Edited by Teja Lele Desai