The travel card FinTech issues co-branded credit cards with Federal Bank, targeting Indians travelling abroad.
At the heart of its pull for cardholders lies in its zero-cost proposition, with a triumvirate of exempted fees:
(1) No joining fee
(2) No annual fee
(3) No mark-up on FX spend
In addition, cardholders also receive free lounge access upon meeting a monthly spending criteria of ₹10,000 and a reward rate of as high as 10-20% (pre-conversion into end benefit when redeeming, which actually brings the reward rate down) on their expenditures in the form of “Scapia coins”.
However, providing all these cardholder benefits for free still carries a cost that has to then be borne by Scapia.
As such, founded in 2022, Scapia lost â‚ą15 crore on the back of â‚ą2 crore in revenue during its first year in business in FY23.
While its revenue skyrocketed by 12x to â‚ą24 crore in FY24, its losses also surged by almost 6x to â‚ą88 crore.
Though one may be pre-disposed to assume that these losses will be addressed automatically once the start-up scales further, a cursory look at OneCard, which has much higher annual revenues worth â‚ą1,426 crore on the back of over a crore cardholders (based on 1Cr+ app downloads) and still loses money hand over fist, to the tune of â‚ą401 crore a year, suggests otherwise.
However, these are just high-level financial figures, so let’s take a deeper look at Scapia’s revenue, costs, and cardholder base to understand why.
Note that since that FY25 figures are not yet available and Scapia anyways had to cease onboarding new cardholders for much of FY25 due to a restriction placed by the Reserve Bank of India (RBI), only FY23 and FY24 financial estimates have been accounted for below.
Scapia spent an estimated ₹52 crore on customer acquisition between FY23-24, which based on app downloads on Android devices and taking a ratio of reviews on Google Play Store versus Apple’s App Store to estimate downloads on iPhones, leads us to an estimated cardholder base of ~11 lakh at a customer acquisition cost (CAC) of ₹473.
While ₹473 shouldn’t have been an unassailable figure to recover, given Scapia’s revenue of ₹26 crore over that period, that translates to low monetisability of just ₹236 per cardholder.
That’s because by virtue of being a co-brand partner, Scapia primarily earns through commissions that it gets from third-parties for facilitating travel bookings on its app and the interchange fee (~0.2-1.2%) on each transaction that it likely splits with Federal Bank, with the bank also likely fully absorbing any interest revenue that arises due to late payment and thereby disabling that potential revenue stream for Scapia.
When it comes to the latter rev…
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