Flipkart’s Super.money teams up with Kotak Bank to make India’s free UPI payments pay

In a groundbreaking move for India's digital finance landscape, Flipkart's fintech subsidiary, Super.money, has joined forces with Kotak811, the digital arm of Kotak Mahindra Bank. This partnership aims to reshape the way fintech companies generate revenue amidst the challenging environment of free digital transactions in India. The collaboration seeks to provide a comprehensive account that merges UPI payments, savings, and secured credit, targeting the issuance of approximately 2 million secured credit cards over the next year, predominantly aimed at first-time borrowers. Within two years, they plan to expand that number to 5 million. According to Prakash Sikaria, CEO of Super.money, this partnership is expected to contribute around 10% to the company's revenue next year as they steer towards achieving profitability by 2026. India's Unified Payments Interface (UPI) has transformed digital payments by allowing free and instant bank transfers, processing over 19 billion transactions monthly. However, this success poses challenges for fintech companies, as the Indian government prohibits merchant fees that typically support rewards and credit programs. Super.money's innovative strategy of combining secured credit cards with savings accounts aims to create a sustainable business model within this no-fee framework. Sikaria stated, “We do UPI not to solve the pure payment use case but to build an interesting cross-financial services play where we are acquiring and retaining customers with the UPI.” Launched in June 2024 following the spin-off of PhonePe, Super.money has quickly become one of India's leading UPI platforms, generating around $3 million in monthly revenue and boasting an annualized run rate of approximately $36 million. With 80% of its revenue stemming from personal loans, and the remainder from credit cards and payment services, Super.money retains around 85% of its users, with a significant portion of transactions coming from customers under 30. Sikaria elaborated on their dual monetization strategy, encompassing both financial services and commerce, with aspirations to introduce a 'pay-in-three' model akin to Klarna. The new “3 in 1 Super Account” being introduced will combine a savings account, UPI payments, and a secured credit card, all designed to enhance credit access for new borrowers. Opening this account requires a fixed deposit of at least ₹1,000 (about $11), which earns interest and offers cashback on transactions. Additionally, it includes a UPI-on-credit feature that allows users to utilize credit without the need for income verification. This strategic alliance also follows Super.money's previous collaboration with Utkarsh Small Finance Bank to provide secured cards, marking a significant step into mainstream retail banking. Sikaria emphasized the importance of engaging users who are interested in a broader range of financial products while maintaining a focus on UPI as a key acquisition tool. Looking ahead, Super.money has also partnered with Juspay to create a seamless one-click checkout experience for online merchants, aiming to expand their merchant network significantly. With plans to issue around 200,000 secured cards monthly through the partnership with Kotak, Super.money continues to solidify its position in the fintech sector. Having invested about $50 million to launch Super.money, Flipkart is poised to seek additional funding to support the growth of the business. Sikaria noted that while they are currently managing a low cash burn rate, they anticipate needing more capital as they expand their user base and services. The focus remains on catering to India’s top 10 to 30 million users rather than competing with mass-market platforms like Google Pay or PhonePe. “Our goal is to establish a strong secured card franchise with a profitable model for all parties involved,” he concluded.