This startup has a way to make digital payments without cards or wallets

Photo credit: wavebreakmediamicro / 123RF.

If everything goes according to plan, Chaitra Chidanand and Nitya Sharma’s Simpl will create a credit system that is unlike anything the world has seen before.

Here is the plan.

Let’s say you decide to buy something from popular Indian food delivery startup FreshMenu. When you get to checkout, you can choose to “Pay later with Simpl.” Your bill is immediately subtracted from the credit limit that Simpl has provided you for the fortnight. You’ll have to clear that bill every 1st and 16th.

Your Simpl account is linked to your phone number. The more you buy and the more responsible you are, the bigger your spending limit gets. If you link your Facebook to your Simpl, your credit increases. Link information from India’s new biometric identification system, Aaadhar, and you might increase your credit some more.

Credit doesn’t roll over. If you haven’t paid off the previous fortnight, you aren’t eligible for a new one. That means that there are no interest rates.

The credit you’ve taken out from Simpl is powered by an NBFC – a non-banking financial company. NBFCs are the only entities outside of banks that India’s central bank, the Reserve Bank of India, has given permission to lend money.

As of now, Simpl can only be used by customers that merchants have approved. That approval will be something like – the more often you use FreshMenu, the more likely you are to get offered an invite to Simpl, and the higher your loan size.

“What we believe will happen is a giant leapfrog of the credit card itself,” Chaitra says concisely.

It’s not hard to understand why I needed a strong cup of coffee before starting our conversation.

How it all works

Simpl sits right at the point of sale, where a customer completes their transaction. That spot is a heavily contested battleground. There, the company needs to prove that it’s better to take out a small loan than it is to pay using an e-wallet, or with a bank account, or by cash.

Simpl has raised funding from US-based Green Visor Capital, IA Ventures, and a few angel investors.

End-to-end credit system

Credit is your friend

Moving credit around a bit

No time to falter