At a time when shopping, ordering food, booking tickets or even paying bills, happens online and instantly, visiting a bank and waiting for three weeks to get a credit card is the last thing on the minds of today's fast-paced working youth. Further, one needs to submit a tonne of documents, which are then checked manually making it a time consuming procedure. To make matters easy, Gunjeet Singh and Amit Kumar launched GalaxyCard, an instant app-based credit card, which would use faster technology to scan through the documents ensuring immediate credit access to the customers in three minutes, at any time of the day.
Kumar had his eureka moment after months of market research inspired by the government’s plan to achieve a cashless economy. The plan involved providing credit without charging a joining fee and annual fee. Although, a few bank schemes offer the same, it is mostly applicable for the first year of issuing the card. The joining fee for banks normally starts at Rs.200 and can go upto Rs.25,000. Similarly, the annual fee can be somewhere between Rs.299 and Rs.8,000.
GalaxyCard provide customers with an instant access to upto Rs.25,000 credit limit, minimum limit being Rs.2,000, at zero interest rate for the first 45 days, followed by 3% per month, if the money is not repaid. The credit limit eventually increases based on the customer’s repayment record. Its key borrowers are mostly salaried youth aged around 26 years old, earning around Rs.500,000 per annum.
The start-up has partnered with banks and non-banking financial company (NBFCs), which provides them with the lending fund The user just needs to install the application and upload their PAN and Aadhar card and Income Tax Return (ITR).
Explaining the verification mechanism, Singh says, “We follow all the steps that a bank does to check the documents. But our verification happens simultaneously through our in-house software. For instance, the moment we get the user’s PAN number, we get to know his credit score. Through the bank statements, we get the income level, balance maintained and also if there is any suspicious activity in the account. ITR lets us know the tax records.” GalaxyCard has networked with credit bureaus and its servers immediately connect with them, the moment the PAN number is accessed. This is a 15-step verification process to decide the initial credit limit to be offered. To manage risk, GalaxyCard does not allow its users to get cash from ATMs using the credit card.
The start-up’s primary income comes from its share in the commission ranging between 2.5% and 3.5%, charged from the merchant on each purchase made using its digital card. The remaining amount goes to the lender (NBFC and banks). Apart from this, the interest on non-repayment of money forms its secondary income.
Despite a strong customer base in tier-I cities such as Mumbai, Delhi, Bangalore and Chennai, the Gurgaon-based start-up is looking forward to penetrate into tier-III cities. At present, its successful tier-II markets are Pune and Chandigarh and tier-III cities such ass Amritsar, Etawah and Kottayam. As the country heads towards having 75 million credit card users, GalaxyCard wants to lend to the majority among them.