HDFC Bank partners with Paytm to issue co-branded credit cards from October

HDFC Bank will work with Paytm to bring co-branded credit cards on the Visa platform to businessmen, millennials and others, the lender said Monday.

The merger will see the lender leverage its position as a leading credit card issuer and superior customer engagement expertise to deliver services to Paytm’s vast customer base of 330 million, thereby enabling deeper penetration into businesses. Tier II and III cities, accelerating the adoption of digital payments.

Credit cards will launch in October during the holiday season to take advantage of strong consumer demand for credit cards, monthly payments equivalent (EMI) and buy now, pay later (BNPL) and the full range of products will be offered by the end of December 2021.

In a statement, the bank said credit cards will be customized to meet the distinct needs of retail customers, from new users on credit to affluent users, and will provide one of the best rewards and cash back for users. The new card offering will also make it easier for small business owners.

HDFC Bank and Paytm will also work together to introduce business credit cards, which will bring many benefits to partner merchants in small towns in India and make it easier for them to access credit with instant and paperless approvals.

“Business credit cards would mark Paytm’s foray into the merchant credit card segment, benefiting Paytm’s base of more than 21 million merchants,” the statement said.

This collaboration between HDFC Bank and Paytm is one of the strategies the lender is adopting to regain its lost market share in the credit card space due to the ban imposed on it by the regulator for eight months, following several outages of its digital offerings.

In July (latest data), HDFC Bank had 14.76 million loans on the market. Its market share in outstanding credit cards fell by 2 percent due to restrictions imposed by the regulator on issuing new cards. Meanwhile, its competitors, notably ICICI Bank, have gained market share at its expense. After the embargo was lifted, the bank made a commitment to come back in force to this segment and to regain the space it lost.

The lender is now looking to return to its pre-embargo execution rate of issuing 300,000 credit cards per month over the next 2-3 months. And, immediately after that, the lender will seek to issue 500,000 credit cards each month starting in February 2022. Therefore, the lender expects to regain its lost market share in the outstanding credit card space in Canada. over the next 3-4 quarters.

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