HDFC Bank ties up with Paytm to issue co-branded credit cards from Oct

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

This tie-up will see the lender leverage its position as the leading credit card-issuer and its expertise in superior customer engagement to offer services to Paytm’s large customer base of 330 million, thus enabling a deeper penetration in Tier II and III cities, accelerating the adoption of digital payments.

The credit cards will be launched in October during the festive season to tap into the high consumer demand for credit cards, equated monthly installments (EMIs), and buy now pay later (BNPL) options and the full suite of products will be offered by the end of December 2021.

In a statement, the bank said, the credit cards will be customised to meet distinct needs of retail customers, from new-to-credit users to affluent users, and offer one of the best-in-class rewards and cashback for users. The new cards offer will also facilitate small business owners.  

HDFC Bank and Paytm will also collaborate to introduce business credit cards, which will offer a host of benefits for merchant partners from the smaller cities and towns of India and enable them to get easier access to credit with instant and paperless approvals.

“The business credit cards would mark Paytm’s foray into the credit card segment for merchants, benefitting Paytm’s base of more than 21 million merchants”, the statement said.

This collaboration between HDFC Bank and Paytm is one of the strategies of 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 in its digital offerings.

As of July (latest data), HDFC Bank has 14.76 million credits in the market. Its market share in oustanding credit cards dropped by 2 per cent due to the restrictions imposed by the regulator regarding issuance of new cards. Meanwhile, its competitors, especially ICICI Bank, gained market share at its expense. Post lifting of the embargo, the bank has vowed to come back with a bang in this segment and regain the space it has lost.

The lender is now looking to get back to its pre-embargo run rate of issuing 300,000 credit cards per month in the next 2-3 months. And, immediately post that, the lender will look to issue 500,000 credit cards every month beginning February 2022. Consequently, the lender is expecting to regain its lost market share in outstanding credit cards space in the next 3-4 quarters.