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American Express Banking Corp, which offers the fabled ‘black card’ to the world’s wealthiest, plans to also introduce a credit card for mid-income groups in India by the end of this week.
The credit card issuer has partnered with PAYBACK, India’s largest coalition loyalty programme, to launch the co-branded card.
“For the first time, we are entering the mid-income segment in India. This segment is large and rapidly growing. Individuals in the age group of 24-35 years with an annual income of Rs 4-7 lakh will be our target customers,” Shailesh Baidwan, country manager and head of consumer services at American Express, told Business Standard.
Currently, the annual fee for American Express’ cards in India is anything between Rs 4,500 and Rs 50,000. The first-year annual fee for American Express PAYBACK Credit Card has been kept at Rs 750. While from the second year, the fee doubles to Rs 1,500. It is waived if the cardholder spends more than a certain amount.
Baidwan said, “People will not part with their money unless they see value. The mid-income segment is extremely smart and value-conscious. Our partnership with PAYBACK will allow us to offer benefits that are tailored to meet specific needs of this segment.”
The cardholders will get special welcome gifts such as discount vouchers of Rs 3,000. The card will offer high earn rate of three PAYBACK points for every Rs 100 spent.
Customers can earn points from both American Express and PAYBACK for using the card at partner brands across categories such as entertainment, hyper and supermarket, utilities, fuel, travel and telecom.
Initially, American Express will launch this card in the top-seven cities of India. Subsequently, it will introduce the card in five more cities. American Express will use PAYBACK’s database, partner locations, online and corporate channels to market this card.
According to sector analysts, the entry of Indian banks in the super-premium segment in the past couple of years has increased competition in that space and might have persuaded American Express to also enter the mid-income segment.
Baidwan, however, said the move does not suggest a shift in American Express’ focus from the super-premium segment.
He added, “It is not an either/or strategy. We will continue to be an important player in the premium and super-premium segments. We will continue to launch products customised for super-affluent groups. At the same time, the mid-income segment will also be a core part of our strategy.”
He does not expect any stress on American Express’ asset quality following its entry into the mid-income segment. Baidwan said, “Customers are aware of the need to maintain high credit scores. The improvement in credit bureau infrastructure has given us the confidence to enter this new segment.”
According to the Reserve Bank of India data, American Express is the seventh largest credit card issuer in the country with a portfolio of 632,026 cards at the end of April. It, however, has the third largest share in credit card spends in India.
CARD CALL
- American Express Banking Corp has partnered with PAYBACK, India’s largest coalition loyalty programme, to launch the card
- The first-year annual fee is Rs 750. It doubles from the second year. It is waived if the cardholder spends more than a certain amount
- The cardholders will get special welcome gifts. Customers can earn points from both American Express and PAYBACK for using the card
- Initially, American Express will launch this card in the top-seven cities of India. Subsequently, it will introduce it in five more cities
