HDFC Bank will work with Paytm to offer co-branded credit cards on the Visa platform to businesspersons, millennials and others.
This partnership will see the lender leveraging 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 customers, enabling deeper penetration into Tier 2 and Tier 3 cities, accelerating the adoption of digital payments.
Credit cards will launch in October during the holiday season to take advantage of high consumer demand for credit cards, equated monthly installments (EMIs) and buy now pay later (BNPL) options, and the full range of products will be offered by the end of December 2021.
The bank said in a statement that the credit cards will be customized to meet the varying needs of retail customers, from new-to-credit users to affluent users, and to offer one of the best rewards and refunds to users. Introducing the new cards will also make it easier for small business owners.
HDFC Bank and Paytm will also collaborate to offer business credit cards, which will bring a variety of benefits to business partners in smaller cities and towns in India and allow them to easily access credit through instant and paperless approvals.
"Business credit cards would mark Paytm's foray into the credit card segment for merchants, benefiting Paytm's base of more than 21 million merchants," the statement read.
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 regulator's eight-month ban, 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 credit cards in circulation decreased by 2 percent due to restrictions imposed by the regulator regarding the 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 return to its pre-lock foreclosure rate by issuing 300,000 credit cards per month in the next 2-3 months. And then immediately, the lender will look 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 the next 3-4 quarters.
Also Read: M2P acquires credit card sourcing startup Wizi