Our co-branded credit cards have quickly gained popularity in the market. At present, we have co-branded credit card partnerships with HDFC Bank and SBI Card, two of India’s leading credit card issuers. We earn an upfront activation fee and a portion of the interchange fee for the lifetime of the card.
Through the credit card distribution business, we are able to monetize the traffic on Paytm Super App as banking customers increasingly prefer non-bank apps for transactions. This forms part of our cloud revenue along with advertising and marketing offerings.
According to our Q3 FY23 earnings, revenue from our Cloud division grew 15% year-on-year to ₹235 Cr, with advertising and credit card distribution scaling well. We activated nearly 1.5 lakh credit cards in the October-December quarter, taking the total activated cards to 4.5 lakh.
We see strong cross-sell opportunities from our existing user base who have taken loans through our platform. Our large Paytm Postpaid customer base also provides cross-sell opportunities for Personal Loans and Credit Cards.
During the third-quarter earnings call, our President and Group Chief Financial Officer Madhur Deora mentioned that co-branded credit card distribution accounts for 20-25% of Cloud revenue. “We do expect that to grow, given that credit cards as a business is expected to grow faster given the very low penetration that we have,” he said.
The cards carry an attractive proposition. They provide up to 5% unlimited cashback across spends on essentials, shopping, entertainment and travel among others.
In addition to free complimentary add-on cards for use by family members, cardholders can enjoy benefits up to ₹75,000 with a complimentary Paytm First Membership as a welcome offer.
Bhavesh Gupta, Head of Payments and CEO Lending, said in the earnings call that Paytm has been clocking a monthly run rate of 50,000 cards for the past couple of months. “I believe that this run rate is only going to become better. We aspire to look at about a million cards to be issued in the next 12 to 18 months,” he added.
The credit card industry in India remains largely under-penetrated and India’s value of card transactions (credit card + debit card) as a percentage of GDP is among the lowest in the world.
According to our December analyst presentation, the average retail spend per active card is ₹22,000-₹24,000 per month while we are seeing healthy growth in activation as well as spends per active card. It is noteworthy that 90% of customers who obtain a credit card through our platform remain active users, driven by the variety of use cases on the Paytm Super App.