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

India’s free digital payments revolution has upended how money moves, but not the way fintech companies make it. Now, Super.money, Flipkart’s fintech arm, is teaming up with one of India’s largest commercial banks, Kotak Mahindra Bank, to change that, by bundling UPI payments, savings and secured credit into a single account aimed at converting usage into profit.

The partnership aims to issue about 2 million secured credit cards within the next 12 months — nearly 60 percent to first-time borrowers — and 5 million within two years. Super.money, which already serves 10 million active users, expects the Kotak alliance to contribute about 10 percent of its revenue next year as it works to achieve profitability by 2026, CEO Prakash Sikaria said in an interview.

India’s Unified Payments Interface (UPI), backed by the Indian government, has made instant bank transfers free and ubiquitous, processing more than 19 billion transactions per month. However, this success has left little room for fintech companies to make a profit, because regulatory bodies, including India’s Ministry of Finance, do not allow merchant fees that typically fund rewards and credit programs. The Super.money bet – using a secured card and savings account to recreate incentives – offers a model for building viable business models on top of no-fee payment systems.

“We use UPI not just to solve a payment use case,” Sicaria told TechCrunch. “We are creating UPI to build an interesting play for financial services where we acquire and retain customers through UPI.”

Launched in June 2024 as Walmart-owned Flipkart’s latest fintech venture after spinning off PhonePe in 2023, Super.money is already generating monthly revenue of about $3 million, with an annual run rate of about $36 million, the executive said.

The fintech app has emerged as one of the top five UPI platforms in India in recent months, processing more than 200 million transactions a month for four straight months through August, according to the National Payments Corporation of India, the federal body that runs the system.

About 80% of Super.money’s revenue comes from personal loans, 10% from credit cards, and the remaining 10% from payment products such as bill payments and recharges. Fintech companies say they retain about 85% of users, and that 60% to 70% of their transactions come from customers under 30 years old.

Sicaria noted that Super.money’s business model is based on two monetization drivers. “The first is the financial services engine – personal loans, cards, deposits and similar products – and the second is commerce,” he said. “Our idea is to bring a Klarna-style ‘pay in three’ model to the commerce side, creating a financial overlay that allows customers to buy now and pay later within the Super.money ecosystem.”

The partnership with Kotak Mahindra Bank, India’s fourth largest bank by market capitalization, gives Super.money access to a large, regulated banking infrastructure. This follows an earlier tie-up with Utkarsh Small Finance Bank to specifically offer secure cards through its platform, marking the move of fintech into mainstream retail banking.

The collaboration offers what the companies call a “3-in-1 premium account”, which combines a savings account, UPI payments, and a secured credit card backed by fixed deposits aimed at expanding access to credit for first-time borrowers.

To open a Super 3-in-1 account, users need to make a fixed deposit of at least INR 1,000 (about $11). The account earns interest on the deposit and offers cashback on every transaction. It also includes a UPI-on-credit feature – a deposit-backed line of credit that does not require any proof of income.

Secured cards were chosen as the core product because they fit into India’s no-fee UPI system while still allowing rewards and cashback that the platform was never designed to support, Sicaria told TechCrunch.

“Our focus is on attracting users who have a greater propensity to interact with our products,” he said. “UPI is the main attraction for engagement and acquisition, but for people who don’t want to participate in financial services or other products that we’ve launched, we don’t want to serve them from a UPI perspective or a payment perspective.”

The partnership with Kotak Mahindra Bank comes soon after Super.money teamed up with SoftBank-backed Juspay to launch a one-click payment experience for online merchants, primarily targeting direct-to-consumer brands.

About 1,000 merchants are already using this solution, and Super.money plans to expand this network through partnerships with more D2C operators and other companies within the Flipkart group, Sikaria said.

The secured card earns merchant discount revenue on transactions, and that funds the cash back, Sicaria said. “Obviously there is a standard partner bank acquisition fee that we charge the bank, so that comes as monetization for us as well,” he added.

Super.money plans to issue around 200,000 secured cards per month under its partnership with Kotak before expanding to other banks, Sikaria said.

So far, Flipkart has invested around $50 million in Super.money to start its operations. As the business expands, fintech companies plan to raise additional capital – perhaps from outside investors as well.

“We need more capital for at least two years,” Sicaria said. “Very soon, we will start formulating our capital raising strategy.”

He declined to say whether the next round would come from Flipkart or external investors, but noted that Super.money is receiving internal interest from “a lot of investors.”

Meanwhile, Sicaria said the company is keeping its cash burn rate low, describing its current monthly burn as “low 2 million numbers” without providing details.

He added that Super.money is deliberately focusing on the top 10 to 30 million users in India, rather than competing with mass-market payment companies like Google Pay or PhonePe that target hundreds of millions.

“What we want to do is build a massive secured card franchise with a profitable P&L for us, the bank and our customers as well,” Sicaria said.