Going it has not been good for the merchants. There was a time when banks offered credit cards that offered a regular discount every time a consumer swiped the card at a petrol station or traveled by their favorite airline. But as consumers increase spending through electronic commerce platforms, card issuers and payment gateways change how they benefit. Simply put, the more a consumer spends, the more these intermediaries understand and this helps tailor products and services.
In November 2016, there has been a significant increase in acceptance due to assistance in credit card usage in India. To serve the fickle millennial customer, card issuers are partnering with platforms such as Zomato, Flipkart, and MakeMyTrip, offering even more than bells and whistles. .
In the last few months, Zomato, Flipkart and IndiGo have launched co-branded cards with major private banks such as RBL Bank, Axis Bank and HDFC Bank, offering benefits, cashback and easy EMI. Industry experts say that over the past few years, companies have been contacting banks through temporary request proposals (RFPs) to launch co-branded cards. Even Google has called for an RFP for co-branded cards and is negotiating with future partners, FE has learned.
This is in contrast to older models where banks would have to line up to collaborate with premium brands such as Jet Airways or Vistara. Rajiv Kumar K, Senior Vice President, South Asia, MasterCard, says that in the year 2018 alone 15 RFPs for co-branded cards have been floated by companies. “There is huge potential for this market as brands are quite keen to launch these cards themselves,” he said, adding that such schemes help companies retain customers better.
For instance, the Flipkart credit card offered by Axis Bank offers 5% cashback, no-cost EMI, airport lounge access and advance discount to the card holder on all transactions. Zomato’s card also offers online / offline purchases as well as credits / points with complimentary subscription to the app’s Gold service. Such offers are good for bargainers.
Sanjeev Moghe of EVP states that co-branded cards today account for only 5–10% of the total credit card market. And head of cards and payments, Axis Bank. What’s more, at the end of January only 5.6 crore outstanding credit cards have been placed between 3-3.5 million persons and this means that there is a lot of scope for growth.
Is in the process of releasing another innings. Given that consumer and digital companies are sitting in huge amounts of data about consumers and have various tools to assess consumers’ credit potential, issuers are offering immediate issuance without any paperwork.
Uber’s partners say online cab aggregator prices ride based on pick-up or drop location, which helps assess a consumer’s financial bandwidth. As a result, ride prices vary for different consumers. The digital card sits on the consumer’s phone and is good to go. In fact, cards issued by app-based companies often sit in applications and go live before physical cards reach them.
Banks are seeing a good opportunity here as co-branded cards, especially those launched by digital players, help them expand their card user base in a cost-effective manner.
Moghe of Axis Bank said, “In addition, data from various digital and e-commerce platforms enable us to reach the customer at a lower cost as well as underwrite. The co-branded card offer is a win for everyone – customers, partners and banks.
A credit card expands the size of a customer’s wallet and a co-branded card comes with more value in the form of points on that particular platform and is therefore also a loyalty mechanism. “
The company benefits because the consumer spends more with the co-branded card value proposition.