TechCrunch covers the launch of a credit card, issued as a co-brand through Citi that looks like a potential game change in the fledgling India credit card market.
- India’s largest mobile wallet app, has branched out to several businesses in recent years as threat from Google and Facebook grows. On Tuesday, it added another category to the list: credit cards.
- The firm, operated by One97 Communications, today unveiled Paytm First Credit Card with lofty benefits as it races to bulk up its financial offerings. The cards, issued by Citi Bank, will be the first in the country to offer unlimited, one percent cashback on purchases, Paytm claimed in a statement.
- The company is hoping to rope in about 25 million credit card customers in the coming months.
The alignment with Citi gives Paytm’s new offering credibility. Citi is a top credit card issuer both globally and in the U.S. market.
- The penetration of credit cards remains very low in India with under 50 million people possessing one.
- With people conducting most of their businesses through cash in the nation, banks have little understanding of a customer’s credit history and score.
- And it also doesn’t help that banks in India are still wary of issuing credit cards to those who don’t perfectly fit the traditional blue collar job.
The offering is big news, not only because Citi is in the fray. Other smart-money investors are involved.
- Backed by SoftBank, Alibaba, and most recently Warren Buffett’s Berkshire Hathaway Paytm has the capital to spur the adoption of its new credit card.
- As part of the package, Paytm’s credit card holders will be able to avail dining, shopping, travel, and other offers that Citi Bank provides to its privilege customers.
The Times of India lays out Citi’s play:
- Citi is already one of the largest credit card issuers in India with over 2.7 million cards in March 2019, while Paytm with interest in e-commerce has 300 million users.
- Within that population (of 300 million), even if we take one percent of that population, that is 3 million customers.
The Reserve Bank of India has experienced some growing pains, particularly with protecting their market from non-Indian companies, but this move looks like a well-guided play.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
