Paytm started off as a mobile wallet and has over time expanded into a cashback-driven digital payments platform. It also runs a payment bank as a separate unit. Now, the company is expanding its offerings to credit cards, launching its first such Paytm First visa card, in partnership with Citigroup.
For the US banking giant Citi, this is an expansion of a partnership it began with Paytm a while back. Paytm wallet users were already able to recharge their wallets through the Citi mobile app. The credit card, will be marketed by Paytm, but it will be underwritten by Citigroup, as mobile wallet’s cannot issue such instruments.
The USP of this credit card is that users will get a one per cent unlimited cashback for every transaction. In most other credit cards, users typically get reward points, which can then be exchanged for discount vouchers or free fuel, depending on the card. In the Paytm First card, the recharges will be credited automatically to the card each month. The card comes at a fee of Rs 500 per year, but it will be waived off if the annual spends on the card exceed Rs 50,000.
For now, the Paytm First card will be only available for Paytm customers, who can apply for it through the Paytm app and the spends could also be tracked via the same app.
Citigroup is already the largest credit cards company globally. In India, Citi has been selling a co-branded credit card with department store operator Shoppers Stop and state-owned oil marketing company Indian Oil. However, the partnership with Paytm is first such where its launching a white-label card, essentially where the card is marketed and sold by Paytm, but its issued and underwritten by Citi. In the US, Citi has multiple such partnerships with companies like Best Buy, Costco and American Airlines.
“The form of distribution has changed. You have to go where your potential customers are and that is within ecosystems. So, we connect seamlessly into these ecosystems. In the case of Paytm, where the potential 300 million customers are within their ecosystem... Our target market is typically city-based, urban and emerging affluent customer… Even if you take one per cent of that population, that is 3 million customers. So, we think there is a tremendous potential for growth of this partnership,” said Stephen Bird, CEO of global consumer banking at Citi.
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According to Citi executives, usage of Citibank credit cards in India is on an average 1.4 times more than that of the industry with average monthly usage of around Rs 15,000 to Rs 20,000 per month. Paytm getting into the credit card space is part of its plans to offer a bouquet of consumer-focused products and platforms.
“While, championing of Paytm is the mobile-led payment system, we understood that there are customer needs fulfilled with cards. That is why we had launched debit card of our (payment) bank and now we complete our offering with credit card in partnership with Citibank,” said Vijay Shekhar Sharma, the chairman and CEO of One97 Communications.
Paytm, which is backed by Japan’s Softbank and China’s Alibaba Group among others, is the largest mobile wallet company in India, with a user base of around 300 million. Its active monthly users (those users who log on to the app each month) is around 150 million.
In recent times, the company has launched a separate platform for mutual funds. Next on cards is a platform to sell insurance policies.
According to Sharma, a few products have been offered to select customers through partnership with insurance companies, which will be expanded. The aim is to become a insurance broker, which will help it offer insurance products of many companies to its customers.
