Paytm, the over $10Bn valued Indian digital payments giant, is announcing the next logical step in its fintech journey – credit. And the company is planning to do the same by introducing co-branded credit cards, in partnerships with some of India’s largest banks. The idea is to launch digitally-enabled credit cards with one-touch services embedded into them.
India, despite being the world’s 5th largest economy, running on perhaps the most technologically advanced and connected financial services systems, still lacks well behind in terms of credit cards adoption. According to Research and Markets, The credit card user base in 2019 reached 47 million and the market is anticipated to grow at a CAGR of more than 25% during 2020-2025, on account of rising popularity of credit cards and growing trend of purchasing products first and paying later.
But those numbers are paltry when compared with the number of debit card users in India. India has over a billion debit cards, one of the largest globally. And while India’s demonetisation decision in 2016 propelled digital payments and debit cards to a whole new growth trajectory, the same did not happen with credit cards. Consumers continue to associate credit cards with high levels of risk, fraud, and the fear of high penalties in case of accidental defaults.
Paytm though, with its massive digital payments infrastructure behind it, wants to change this.
For starters, Paytm’s co-branded credit cards will be equipped with instant one-touch services such as change of the security pin number, updating the address, blocking the card in case of loss or fraud prevention, issuance of a duplicate card and viewing outstanding credit-limit. It will also have options to safeguard users against fraud by switching off the card for contactless payments or international transactions when not required.
Additionally, Paytm’s credit card will provide insurance protection against fraudulent transactions to protect users money. This service will also come with a personalized spend analyzer helping in assessing expenses and planning future spends smartly. All this makes for a wholesome customer experience, where the entire universe of services related to the credit card account can be availed of. There is absolutely no need to visit the bank branch or call customer support.
Then there is the entire digital payments ecosystem that comes into play. The company has digitised the entire credit card experience on the Paytm app – from the application process to tracking & issuance of the credit card. It offers the flexibility of choosing a convenient time on the app itself for the collection of documents along with online tracking of card issuance & delivery. The seamless application process will reduce the rate of application rejections — a big factor in such low credit cards penetration — and will enable more people to participate in the formal credit system.
Paytm says that it will be partnering with various card issuers to introduce co-branded cards and is aiming to issue two million cards in the next 12-18 months.