Slice’s decision to change payment terms provokes backlash from customers

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Following Slice’s decision to limit the interest-free “pay in 3 months” offer to certain customers, users are questioning the fintech unicorn’s differentiation from traditional credit cards.

Some Slice users have also taken to social media to say they will stop using the card once they pay bills for the current cycle. “This new update goes against the reason why we got Slice Super Card! What is the difference between slice and other credit cards in terms of payment terms, if we have to pay extra interest on any card payment!” said Chetan Chauhan, (@Chetan_711).

Another Twitter user, Pavan (@RangeenPanda) said: “Just read that @sliceit_ no longer lets you ‘slice’ your credit card bill without interest. I thought that was their whole product. What is the point of getting a slice on your bank credit card now?” Similarly, Srikant, (@SrikantNXT) summed up the broader customer sentiment in his tweet: “I made my last payment today . The slice card is no longer a credit card challenger!

In an update notification on the Slice app, the company said that starting June 1, full payment will continue to be interest-free and interest will be charged when customers settle the bill in two or more installments. more. For all other usage in previous billing cycles that have been split into 2 or 3, any interest charged is fully refunded by Slice through Cash Back.

“Risk profiling should”

Nitin Gupta, CEO and founder of Uni Cards, which also offers 1/3 card payment, told BusinessLine that some players are offering this credit model to everyone, including those who are significantly high risk. , but that the product paying 1/3 should be offered at the best risk. profile customers whose loss rate is almost zero. “The customer who would have obtained the personal loans at 20-40%, received the 1/3 payment option. While 1/3 pay must have been reserved for super prime customers who get 12% personal loans and have a CIBIL score above 770. This is why companies that offered this feature to prime and subprime customers might have suffered losses,” he said. added.

Gupta noted that Uni has always reserved its Pay 1/3rd card for super premium customers from the start and therefore is not worried about the risk. “We work with partners to offer credit and our partner’s delinquency is 0.2%. Paying 1/3 works for us because our customer quality is good and our delinquencies are low,” he said.

“Sustainable model”

Companies like Slice and Uni Card generate revenue primarily from the MDR (Merchant Discount Rate) earned on each transaction and it can sometimes be lucrative for these companies to issue more cards and push more transactions onto the platform to increase growth metrics.

“However, in the long term, for a sustainable model, it is important to balance growth with the correct risk profile and a robust collection mechanism. Therefore, Slice’s initiative to focus on consumer creditworthiness before to issue a line of credit is a step in the right direction,” said Pearl Agarwal, Founder and Managing Director of Eximus Ventures.

Further, commenting on whether this move will lead to a decline in Slice’s user base, Agarwal noted that Slice is targeting two segments – credit novice consumers with no credit score and customers who have a credit score but use Slice cards for extra cash.

“Those without a credit score should continue to work with Slice to gain access to instant cash and build a credit history before switching to credit cards. While the other segment of customers who have a credit score will prefer existing credit cards for regular purchases and will occasionally tap into Slice for access to additional liquidity pools. There could be a move towards credit cards among this user segment. However, Slice cards still offer no membership fees or annual fees,” she added.

Slice has not commented on BusinessLine queries.

Published on

June 09, 2022

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