In an era of rising disposable income and point-of-sale transactions on e-commerce websites, the usage of credit cards has increased dramatically. To give some perspective, credit card spending has been hitting an all-time high every month, according to the Reserve Bank of India data. Analysing these trends in customer behavior has enabled us to identify opportunities and distribute suitable credit products to them and one of them is Paytm co-branded credit cards that offer lucrative discounts on travel, movie tickets, and others.
Currently, we have partnerships with HDFC Bank and SBI Card, two of India’s leading credit card issuers. With this, we generate upfront distribution revenue and lifetime usage fee. Our users can get these cards by applying on the Paytm app.
As of June 2023, we have 7.5 Lakh activated credit cards, an increase of 1.6 Lakh cards in the quarter. Our co-branded credit card business has grown significantly both in terms of new card issuances as well as spends. Further, this trend is expected to continue going ahead as we see strong cross-selling opportunities from our large existing user base who have taken loans through our platform.
Our Founder and CEO Vijay Shekhar Sharma in the June quarter earnings call mentioned that banks and NBFCs have highly contributed to easy credit availability for customers. Also, he believes there is a huge portion of customers still pending to come on board. “You can see the growth in the credit card spends, you can see the growth on BNPL equivalent, whether it is a large ticket or a small ticket on the counter is the growth direction. While the debit side has plateaued is not what I would say. There is a large customer base still pending to come on board. But definitely, credit is adding the flare of extra revenue and it will add to the net bps margin continuously,” said Sharma.
Moreover, Sharma believes that credit may become a choice of payment for many in the coming time. “India is at the cusp of the next payments revolution where credit will become the mainstream payment choice. Our users are already savvy on QR code-based payments and with RuPay credit cards working on UPI QR codes, transactions through mobile phones will get a further boost, marking a new era in digital payments,” he had said during the launch of Paytm SBI Credit Card.
It’s noteworthy that the credit card industry in India remains largely under-penetrated, offering huge opportunities to tap the market.